The Talk Show

00:00:00 ◼   ► Hey gang, it's your pal John Gruber here kind of a curveball show this week. I was out in San Francisco

00:00:06 ◼   ► For of all things Microsoft's build developer conference more or less. It's Microsoft's version of WWDC

00:00:14 ◼   ► And we talked about that on the show

00:00:17 ◼   ► But one of the things that that I got offered Microsoft offered to give me a room in the conference

00:00:24 ◼   ► Thursday afternoon to do a live audience episode of the talk show and it kind of came together

00:00:30 ◼   ► Not quite last minute, but but close and I took it as an opportunity to have a new guest because I met

00:00:36 ◼   ► You know some people from the other side of the fence who cover Microsoft more than Apple and so Ed bot whose

00:00:43 ◼   ► Coverage of Microsoft. I've been following for a long time many years big fan of his Twitter account to

00:00:50 ◼   ► Never met him in person before though. So took the opportunity to invite him on the show. That's what you're going to hear

00:00:56 ◼   ► So this was recorded in

00:00:58 ◼   ► Moscone West the people in the audience were all attendees of the build developer conference. I think it came off. Okay, you'll hear from me

00:01:06 ◼   ► I'm I didn't do any sponsor reads during the live event. So I'm recording those in post which is unusual

00:01:12 ◼   ► I usually I just do them right in the middle of the show, but it didn't seem right with a live audience

00:01:16 ◼   ► So I'll pop back in

00:01:19 ◼   ► Probably three more times with interesting information from this shows great sponsors and enjoy the show. I think it came off pretty well

00:01:26 ◼   ► I think I had a good time. Oh, yeah before we start one more thing

00:01:29 ◼   ► We're not sure what happened. I don't know what happened

00:01:32 ◼   ► But the audio file that we got from Microsoft cut it clipped a few minutes from the end of the show

00:01:38 ◼   ► I think it was like exactly 74 minutes

00:01:40 ◼   ► So our best guess is that maybe they were recording it right to a CD and there's a 74 minute time limit

00:01:47 ◼   ► So not much got cut off, the show didn't go much longer than that.

00:01:50 ◼   ► But I actually, you know, at the actual event I did like a nice thank you to everybody who showed up,

00:01:55 ◼   ► and to Ed, and it wrapped up rather neatly.

00:01:59 ◼   ► Whereas what you're going to hear here ends a bit abruptly.

00:02:02 ◼   ► But the good thing is it kind of works out because it ends in a very Microsoftian way.

00:02:08 ◼   ► Easily, number one question that I've been asked this week is, "Why are you here?"

00:02:15 ◼   ► And it's very easy, I'm here for the free Xbox.

00:02:19 ◼   ► - Aren't we all?

00:02:22 ◼   ► - Everybody get their free Xbox?

00:02:24 ◼   ► (audience cheers)

00:02:26 ◼   ► So, says the guy from Microsoft.

00:02:29 ◼   ► So I'm here, this is the talk show, this is my podcast.

00:02:34 ◼   ► I'm John Gruber.

00:02:36 ◼   ► I'm assuming the people who are here

00:02:38 ◼   ► are probably familiar with me.

00:02:39 ◼   ► My guest this week is Ed Bott.

00:02:42 ◼   ► - Hi John.

00:02:44 ◼   ► - Thank you for joining me.

00:02:45 ◼   ► - It's been a long time.

00:02:46 ◼   ► How long have you been covering Microsoft as a journalist?

00:02:50 ◼   ► - Full time since 1992.

00:02:53 ◼   ► - Right, as long as I've been following tech,

00:02:57 ◼   ► your byline and stuff on Microsoft is in my mind.

00:03:01 ◼   ► I don't remember when you weren't.

00:03:03 ◼   ► - I don't either.

00:03:05 ◼   ► - It is very different than an Apple conference.

00:03:14 ◼   ► I'm a foreigner here.

00:03:16 ◼   ► I go to WWDC just about every year.

00:03:19 ◼   ► This is my first Microsoft developer conference

00:03:23 ◼   ► that I've attended.

00:03:24 ◼   ► Very interesting.

00:03:25 ◼   ► Similar in certain fundamental ways, but very different.

00:03:29 ◼   ► I can't think of a better obvious answer is that

00:03:32 ◼   ► everybody who came to this conference with 5,000 attendees

00:03:36 ◼   ► on day one was told, "Hey, guess what?

00:03:37 ◼   ► "You're getting an Xbox One."

00:03:39 ◼   ► Is that what it's called, the Xbox One?

00:03:40 ◼   ► - Xbox One, that's it.

00:03:42 ◼   ► which was, I think, a very popular move.

00:03:45 ◼   ► At Apple conferences, one time, like 11 years ago,

00:03:51 ◼   ► they gave away a mouse.

00:03:53 ◼   ► (audience laughing)

00:03:56 ◼   ► This year they had a broken mouse,

00:04:00 ◼   ► was featured in one of the demos that they were doing.

00:04:05 ◼   ► It was kind of, it was supposed to be

00:04:09 ◼   ► a typical enterprise app that,

00:04:11 ◼   ► that someone in the audience might develop

00:04:15 ◼   ► for their company.

00:04:16 ◼   ► And so they used one of the great Microsoft fake company

00:04:19 ◼   ► names, Fabrikam.

00:04:21 ◼   ► And they built a mobile app.

00:04:25 ◼   ► And so he was able to report that he was giving a keynote

00:04:29 ◼   ► address and his mouse was broken.

00:04:31 ◼   ► He could take a picture of the mouse

00:04:32 ◼   ► and then send that to facilities,

00:04:36 ◼   ► and facilities could bring him a new mouse.

00:04:38 ◼   ► And the interesting thing about that app

00:04:40 ◼   ► was that they demonstrated it on an iPhone.

00:04:43 ◼   ► Right.

00:04:44 ◼   ► No, that's very true.

00:04:45 ◼   ► So--

00:04:47 ◼   ► It's strange times, right?

00:04:49 ◼   ► Very weird times.

00:04:50 ◼   ► I've had several people this week remind me

00:04:53 ◼   ► of that scene from Ghostbusters, dogs and cats living together,

00:04:58 ◼   ► mass hysteria.

00:05:00 ◼   ► And I think they expect fireworks here.

00:05:04 ◼   ► And I think, in a way, they're going

00:05:06 ◼   ► disappointed because what we really have here is two guys who understand their respective worlds,

00:05:16 ◼   ► and those worlds have been far apart for a long time. And there was this sort of Venn diagram

00:05:23 ◼   ► where you had this little slice in the middle, and now those worlds are overlapping significantly

00:05:30 ◼   ► more than they ever have. Yeah, I mean, I have to acknowledge it because everybody, I mean,

00:05:35 ◼   ► I can't not acknowledge it, that I was actually

00:05:38 ◼   ► featured in the keynote today wearing my other hat,

00:05:41 ◼   ► not the daring fireball hat, but Q branch,

00:05:44 ◼   ► the software company I work at with my colleagues,

00:05:48 ◼   ► Brent and Dave, iPhone only right now,

00:05:51 ◼   ► but we're using Azure, we've announced today,

00:05:56 ◼   ► for our backend sync, and they were nice enough

00:05:59 ◼   ► to ask us if we would do a little promotional video

00:06:02 ◼   ► and talk about it and say why.

00:06:04 ◼   ► And you know, an awful lot of, what, holy shit.

00:06:08 ◼   ► (laughing)

00:06:11 ◼   ► Right, I watched the video, I didn't get to see

00:06:14 ◼   ► the video before, I was in the keynote and I watched

00:06:16 ◼   ► the video, I was like, okay, I didn't look too big.

00:06:19 ◼   ► - Excellent production values.

00:06:20 ◼   ► - Super nice, very nice.

00:06:22 ◼   ► And the message was exactly the truth.

00:06:25 ◼   ► It wasn't like, here's the lines to give it,

00:06:29 ◼   ► they asked questions and Brent and I gave honest answers

00:06:32 ◼   ► and that's what they put in the video.

00:06:34 ◼   ► So that was great.

00:06:35 ◼   ► And I thought, I have got to check Twitter.

00:06:37 ◼   ► - I believe the first tweet that I saw

00:06:40 ◼   ► after that video ran was somebody who said,

00:06:43 ◼   ► "Hell froze over."

00:06:44 ◼   ► (laughing)

00:06:45 ◼   ► - I saw that one, that was good.

00:06:47 ◼   ► That was very good.

00:06:48 ◼   ► And there were an awful lot of them with pictures too,

00:06:50 ◼   ► which was very weird for me.

00:06:52 ◼   ► Like I am not used to browsing my Twitter replies

00:06:55 ◼   ► and seeing my picture over and over again.

00:06:57 ◼   ► (laughing)

00:06:59 ◼   ► Very unusual for me.

00:07:03 ◼   ► But I also think fundamentally, like you said,

00:07:06 ◼   ► with Venn diagram with ever increasing overlap

00:07:10 ◼   ► between the Microsoft and Apple worlds is

00:07:14 ◼   ► that it's the truth.

00:07:15 ◼   ► There's an honesty to what I'm hearing from Microsoft,

00:07:20 ◼   ► not just with Azure, but a lot of things,

00:07:23 ◼   ► that when they say, hey, it's a multi-device,

00:07:28 ◼   ► multi-platform world, that they mean it.

00:07:31 ◼   ► there's like an acceptance that it's not going to be

00:07:35 ◼   ► 95% of all computing devices running Windows anymore.

00:07:40 ◼   ► That's over.

00:07:41 ◼   ► And how does Microsoft stay relevant and successful

00:07:45 ◼   ► and grow in that world?

00:07:48 ◼   ► - Well one way is by spending, I think it's $3.2 billion

00:07:52 ◼   ► in CapEx this year to build out Azure.

00:07:55 ◼   ► And putting basically large chunks of data

00:08:01 ◼   ► large chunks of the Visual Studio development environment

00:08:05 ◼   ► into that cloud so that it will run in any browser

00:08:12 ◼   ► on any device.

00:08:15 ◼   ► I mean, that kind of expenditure is really

00:08:20 ◼   ► perfect evidence, money talks.

00:08:23 ◼   ► - I think that especially with the people who read my stuff

00:08:29 ◼   ► and are coming from a more interested in Apple perspective,

00:08:33 ◼   ► I think that Microsoft's efforts in that Azure direction,

00:08:39 ◼   ► I didn't even know that number, 3.2 billion in CapEx,

00:08:42 ◼   ► but that's a huge number.

00:08:43 ◼   ► I mean, there are very few companies in the world

00:08:45 ◼   ► that even could spend 3.2 billion dollars.

00:08:49 ◼   ► I mean, that's a really short list,

00:08:50 ◼   ► 'cause it's a massive money.

00:08:51 ◼   ► - Right, that's one sixth of a WhatsApp.

00:08:53 ◼   ► (audience laughing)

00:08:56 ◼   ► (laughing)

00:08:59 ◼   ► - Well the difference there is that Microsoft

00:09:03 ◼   ► is an established company, is operating in a world

00:09:07 ◼   ► where their capex expenditures come from actual profits

00:09:10 ◼   ► from actual revenues and not from

00:09:13 ◼   ► Facebook stock option funny money.

00:09:16 ◼   ► - And there's an ROI on that capex too.

00:09:19 ◼   ► Because you're going to be paying presumably

00:09:23 ◼   ► for those Azure instances and all that bandwidth

00:09:26 ◼   ► and stuff, and there's a lot of, you know,

00:09:30 ◼   ► not just startups, but Fortune 500 companies

00:09:33 ◼   ► that are using that infrastructure as well.

00:09:36 ◼   ► I mean, the other thing about Azure,

00:09:40 ◼   ► when you go, I'm an Azure user myself,

00:09:43 ◼   ► I have an MSDN subscription,

00:09:44 ◼   ► so I get like 50 bucks of credit each month,

00:09:47 ◼   ► and you say, you know, what can you get for 50 bucks?

00:09:49 ◼   ► The shocking thing is that I can run my website on it,

00:09:53 ◼   ► And I think that uses like $7 worth of credit

00:09:57 ◼   ► over the course of a month.

00:09:59 ◼   ► And I can, just incredible flexibility on it.

00:10:03 ◼   ► But when you go to the Azure portal

00:10:06 ◼   ► and you start poking around, you see, okay,

00:10:08 ◼   ► well I'm gonna create a virtual machine in the cloud now.

00:10:11 ◼   ► And you look and you say, okay,

00:10:12 ◼   ► I got all these Windows servers and wait a minute,

00:10:16 ◼   ► there's like this long list of Linux distros as well

00:10:20 ◼   ► that I could do.

00:10:21 ◼   ► so I could do Ubuntu Enterprise and Red Hat

00:10:25 ◼   ► and OpenSUSE and all these things.

00:10:29 ◼   ► And yet another example of where,

00:10:33 ◼   ► if you could get in a time machine

00:10:35 ◼   ► and go back a decade or so and have someone say,

00:10:40 ◼   ► yeah, Microsoft, you're going to be selling

00:10:43 ◼   ► your largest competitor's operating system,

00:10:47 ◼   ► largest competitor's server operating system

00:10:51 ◼   ► in a cloud-based service, they'd wrap you up

00:10:55 ◼   ► and put you away.

00:10:57 ◼   ► - We ourselves are using Azure in a very non-Windows-y way.

00:11:02 ◼   ► We're not running Windows operating system,

00:11:06 ◼   ► we're not using the Windows SQL server.

00:11:10 ◼   ► We're using it in a very open source Unix-y sort of way.

00:11:14 ◼   ► - We are running SQL Server.

00:11:17 ◼   ► We're not running what we're using.

00:11:18 ◼   ► All right, but I think Brent would agree with me though.

00:11:22 ◼   ► Brent Simmons, my colleague and the guy who does all the work.

00:11:25 ◼   ► But it's true, we're not,

00:11:29 ◼   ► we haven't become Windows developers by adopting Azure.

00:11:31 ◼   ► We're still totally iOS developers

00:11:34 ◼   ► and doing this network cloud stuff

00:11:37 ◼   ► in a very open source, non--

00:11:40 ◼   ► - Yeah, so you've got databases,

00:11:41 ◼   ► you've got generic storage that you can configure

00:11:45 ◼   ► just about any way you want.

00:11:46 ◼   ► You've got messaging services available to you,

00:11:50 ◼   ► all sorts of other mobile services

00:11:52 ◼   ► that are available to you, and none of them are Windows.

00:11:57 ◼   ► In fact, what's really fascinating and kind of weird for me

00:12:01 ◼   ► as a guy who has covered Windows for 20 plus years

00:12:05 ◼   ► is that they changed the name of Azure

00:12:08 ◼   ► from Windows Azure to Microsoft Azure.

00:12:10 ◼   ► And that's, on one level that's symbolic,

00:12:15 ◼   ► but on another much more important level,

00:12:18 ◼   ► it's a reflection of how both the company

00:12:21 ◼   ► and the product has changed.

00:12:25 ◼   ► - Yeah, I completely agree.

00:12:26 ◼   ► Another thing I definitely noticed,

00:12:28 ◼   ► and I saw a lot of people commenting on Twitter,

00:12:31 ◼   ► you and I talked about it pre-show,

00:12:34 ◼   ► but during the keynote today,

00:12:37 ◼   ► an awful lot of the demos were running

00:12:40 ◼   ► on non-Microsoft devices.

00:12:42 ◼   ► There were iPhones that were being used in demos,

00:12:45 ◼   ► I saw an iPad and a couple,

00:12:47 ◼   ► there was a demo,

00:12:52 ◼   ► Xamarin, am I pronouncing it right?

00:12:55 ◼   ► - Xamarin.

00:12:56 ◼   ► - The Xamarin demo was running with

00:12:59 ◼   ► an IDE running on a MacBook.

00:13:06 ◼   ► And there's Mac OS X up on the,

00:13:09 ◼   ► you know, I actually felt at home.

00:13:10 ◼   ► - With Safari.

00:13:11 ◼   ► - Right, and Safari, right.

00:13:12 ◼   ► - It was in Safari.

00:13:14 ◼   ► Yeah, so, you know, the same thing.

00:13:16 ◼   ► And I think I tweeted this today as well.

00:13:19 ◼   ► In a lot of the slides, you know,

00:13:22 ◼   ► there was clearly a conscious effort

00:13:25 ◼   ► to be very inclusive about platforms.

00:13:28 ◼   ► But, you know, so there would of course be

00:13:32 ◼   ► the entire Microsoft range going from Xbox

00:13:37 ◼   ► through the various Windows form factors

00:13:39 ◼   ► and then down to Windows Phone.

00:13:41 ◼   ► But then there were Android phones and tablets

00:13:44 ◼   ► and iPads and iPhones, and then Kindle Fire.

00:13:47 ◼   ► So there was also, at one point they said,

00:13:52 ◼   ► and we've added notification support to Kindle Fire.

00:13:56 ◼   ► You talk about coopetition,

00:14:00 ◼   ► but the fascinating thing is that

00:14:04 ◼   ► Amazon Web Services and Azure

00:14:08 ◼   ► could not be more direct competitors.

00:14:11 ◼   ► They're absolutely direct competitors,

00:14:13 ◼   ► and yet if you're going to play this,

00:14:16 ◼   ► we want to be on as many devices

00:14:20 ◼   ► and as many platforms as possible,

00:14:22 ◼   ► you can't say, "Well, we don't like that company,

00:14:26 ◼   ► "so Kindle Fire gets excluded, it's gotta be there."

00:14:30 ◼   ► And I think there's also something when you go around

00:14:34 ◼   ► and you talk to the people with the Microsoft name tags here

00:14:38 ◼   ► there is much less of the

00:14:42 ◼   ► of the sort of hold your nose factor

00:14:45 ◼   ► when you're talking about those other platforms,

00:14:47 ◼   ► well we have to support them.

00:14:48 ◼   ► I think there's some actual genuine enthusiasm now about,

00:14:52 ◼   ► it's almost like it's a,

00:14:55 ◼   ► how many boxes can we tick off

00:14:57 ◼   ► on the support checklist here?

00:14:59 ◼   ► - Yeah, I mean obviously no question about it.

00:15:02 ◼   ► Walking through the hallways here

00:15:04 ◼   ► and just watching, observing.

00:15:06 ◼   ► You see very high, higher than anywhere else I've ever seen,

00:15:10 ◼   ► - It's a percentage of people using Windows phone devices.

00:15:12 ◼   ► No question about it, it makes sense.

00:15:14 ◼   ► It's the Build Developer Conference.

00:15:16 ◼   ► But, I see a lot of people with iPhones.

00:15:20 ◼   ► And it's weird, and so there's one of these ways

00:15:23 ◼   ► where you close your eyes for a decade

00:15:26 ◼   ► and you can miss these sort of tectonic shifts,

00:15:29 ◼   ► but the Apple community, developers, users, and everything,

00:15:33 ◼   ► is far more of a technical monoculture today

00:15:39 ◼   ► than the Microsoft community.

00:15:41 ◼   ► I'm not even saying it's anything other than inevitable,

00:15:46 ◼   ► that with the success that Apple's had,

00:15:48 ◼   ► and the quality of their products,

00:15:50 ◼   ► but if you go to WWDC,

00:15:52 ◼   ► and try to find somebody who's not using an iPhone,

00:15:54 ◼   ► you're gonna have a hard time.

00:15:55 ◼   ► I mean, you'll find somebody,

00:15:56 ◼   ► there's somebody with an Android phone,

00:15:58 ◼   ► because they're there just to write Mac apps or something.

00:16:01 ◼   ► It's not like nobody has it.

00:16:02 ◼   ► - And that guy will also be wearing Google Glass.

00:16:05 ◼   ► - Yeah, exactly.

00:16:07 ◼   ► - You just know it.

00:16:08 ◼   ► I saw one guy at WWDC this year with Google Glass.

00:16:11 ◼   ► - Google Glass and a Galaxy S6 probably.

00:16:15 ◼   ► - You'll see, I mean, you'll find somebody

00:16:18 ◼   ► at a 5,000 person conference using everything.

00:16:21 ◼   ► I took a picture at WWDC this year.

00:16:22 ◼   ► I saw a guy with a flip phone.

00:16:26 ◼   ► (audience laughing)

00:16:28 ◼   ► So I mean, literally, you'll find somebody with--

00:16:30 ◼   ► - That was actually the next iPhone

00:16:32 ◼   ► very cleverly disguised.

00:16:34 ◼   ► They've learned after that whole Gizmodo thing.

00:16:37 ◼   ► We gotta make the disguise is better.

00:16:39 ◼   ► Nobody's gonna steal that one.

00:16:41 ◼   ► (audience laughing)

00:16:42 ◼   ► - It was day one and they had announced the new Mac Pro,

00:16:46 ◼   ► which is a very pretty machine

00:16:47 ◼   ► and it looks very different than everything else.

00:16:49 ◼   ► And they had them, of course, behind glass, can't touch,

00:16:52 ◼   ► spinning around and everybody was looking at it.

00:16:55 ◼   ► And there was this guy taking a picture of it

00:16:57 ◼   ► with his flip phone.

00:16:58 ◼   ► And I thought, and I'm looking around at the other people

00:17:00 ◼   ► and I'm like, this is way more interesting

00:17:02 ◼   ► than the Mac Pro.

00:17:03 ◼   ► (audience laughing)

00:17:05 ◼   ► There's a guy at a developer conference

00:17:06 ◼   ► with a flip-flop.

00:17:08 ◼   ► - He's like, you know, it's performance art.

00:17:10 ◼   ► It had to be.

00:17:11 ◼   ► It's like Andy Kaufman has returned

00:17:13 ◼   ► and is doing that thing.

00:17:16 ◼   ► But you know, so it is true,

00:17:19 ◼   ► you know, inclusiveness of platforms and everything,

00:17:23 ◼   ► and yet there is still a lot of windows here.

00:17:26 ◼   ► - Oh, of course, right.

00:17:27 ◼   ► - A whole lot of windows, and a lot of

00:17:33 ◼   ► pride and investment in what's happening

00:17:38 ◼   ► in those platforms and not just the sort of generic PCs

00:17:44 ◼   ► but in some of the more interesting form factors

00:17:47 ◼   ► and especially the phones.

00:17:49 ◼   ► - Well the other thing too is the developer tools

00:17:54 ◼   ► and Microsoft has always had a golden reputation

00:17:58 ◼   ► for the quality of their developer tools

00:18:02 ◼   ► and in ways that even people like us

00:18:06 ◼   ► who've been only really developing for Apple products

00:18:09 ◼   ► for decades even, have always known

00:18:11 ◼   ► in the back of their heads, boy,

00:18:13 ◼   ► their ID, it blows our stuff away,

00:18:17 ◼   ► or they're debugging the way that you can hook it up.

00:18:19 ◼   ► So it makes sense though that there's so much Windows here

00:18:21 ◼   ► because you've gotta be on Windows

00:18:22 ◼   ► to be using those developer tools.

00:18:24 ◼   ► But they showed some really cool stuff today.

00:18:25 ◼   ► I think that caught my eye,

00:18:26 ◼   ► and I guess you knew about this 'cause I saw you tweet,

00:18:28 ◼   ► but I forget what it's called,

00:18:30 ◼   ► but it's the thing where you can go into the,

00:18:32 ◼   ► you open a webpage, go into the developer mode,

00:18:35 ◼   ► and everybody, you know--

00:18:36 ◼   ► - Yeah, it's called browser link.

00:18:37 ◼   ► - Right, so you can see the CSS and the HTML behind the page

00:18:41 ◼   ► and you can tweak it, and all the major browsers

00:18:44 ◼   ► have had this feature, and you can test like a color change,

00:18:46 ◼   ► that's what they demoed,

00:18:47 ◼   ► and you can change the color of the banner.

00:18:49 ◼   ► But with this browser link, it hooks up to the IDE,

00:18:54 ◼   ► and it'll actually change the source file

00:18:58 ◼   ► as you change it there.

00:19:00 ◼   ► - Yeah, so you're-- - With the page!

00:19:00 ◼   ► - Yeah, so instead of just changing it on the page

00:19:03 ◼   ► and seeing how it looks, it's actually, you know,

00:19:07 ◼   ► you could make the change in the IDE

00:19:10 ◼   ► and see it reflected instantly in the browser,

00:19:12 ◼   ► or you could change it in the browser

00:19:14 ◼   ► and see it instantly reflected in the IDE,

00:19:16 ◼   ► which is pretty mind-blowing, actually.

00:19:18 ◼   ► And, again, in keeping with the sort of ecumenical theme

00:19:23 ◼   ► of the whole thing, they demoed that in Chrome.

00:19:26 ◼   ► - Yeah, that was, and I thought the same thing.

00:19:28 ◼   ► I thought, that's a really cool feature,

00:19:30 ◼   ► but you gotta use IE.

00:19:31 ◼   ► And then as soon as I had that thought,

00:19:32 ◼   ► and they're like, and it works in Chrome.

00:19:34 ◼   ► (audience laughing)

00:19:35 ◼   ► - Yeah. (laughs)

00:19:36 ◼   ► - I was like, so I think the answer to this is gonna be yes,

00:19:38 ◼   ► but do you perceive the same sort of sea change

00:19:42 ◼   ► in attitude, you know, among the,

00:19:45 ◼   ► for about lack of a better word,

00:19:45 ◼   ► the rank and file at Microsoft in terms of--

00:19:49 ◼   ► - Yeah, I think-- - It's a new Microsoft.

00:19:51 ◼   ► - It is a new Microsoft, and unmistakably so.

00:19:54 ◼   ► I think what's interesting though is that for outsiders,

00:19:58 ◼   ► There's a temptation to look at Microsoft today

00:20:02 ◼   ► and think that this change is relatively recent and sudden,

00:20:08 ◼   ► and that it's related to things like Ballmer leaving,

00:20:14 ◼   ► for example, or the success of Android or something.

00:20:21 ◼   ► And actually, one of the interesting things

00:20:26 ◼   ► about having covered this for so many years

00:20:29 ◼   ► is that a lot of the things that we're seeing today

00:20:32 ◼   ► are things that they were talking

00:20:34 ◼   ► about at the equivalent of this show five or six years ago.

00:20:40 ◼   ► In 2008 and 2009, they were basically

00:20:43 ◼   ► describing the world that we saw in yesterday's and today's

00:20:49 ◼   ► keynotes.

00:20:50 ◼   ► And there was some skepticism from people about,

00:20:54 ◼   ► Are you going to be able to pull this stuff off?

00:20:58 ◼   ► And so if I dragged out my notebooks

00:21:02 ◼   ► from some of those events, I think you'd see, wow,

00:21:06 ◼   ► they did that?

00:21:07 ◼   ► They did that?

00:21:09 ◼   ► Eh, they did that, and they shouldn't have.

00:21:10 ◼   ► And they didn't do that one.

00:21:12 ◼   ► But there's a tremendous amount-- back then,

00:21:15 ◼   ► they called it three screens in a cloud.

00:21:18 ◼   ► And I think they might have gotten

00:21:19 ◼   ► the number of screens wrong.

00:21:21 ◼   ► I think there's a little more than three.

00:21:24 ◼   ► but they basically said, you know, phones and PC/tablets,

00:21:29 ◼   ► they didn't think of those as two separate categories,

00:21:33 ◼   ► and the TV were all going to be important

00:21:37 ◼   ► and they all needed to be connected to services

00:21:40 ◼   ► that were capable of running anywhere

00:21:43 ◼   ► because they're gathering data from

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00:23:33 ◼   ► Now, back to the show.

00:23:36 ◼   ► So you think it's fair, you saw, the gist of what I'm hearing there is that you, it's,

00:23:41 ◼   ► The casual observer is going to want to draw a direct cause and effect where we've got

00:23:48 ◼   ► Steve Ballmer announces his resignation, there's a search, and then 60 days ago or so they

00:23:55 ◼   ► said okay, we got our guy, Satya Nadella.

00:23:58 ◼   ► And he's the cloud guy.

00:24:00 ◼   ► Right?

00:24:01 ◼   ► And he's the new CEO and everybody, the board's behind him, Bill Gates is behind him, Steve

00:24:07 ◼   ► Steve Ballmer's behind him now.

00:24:08 ◼   ► Steve Ballmer's retired, he's not the CEO, and Satya Nadella is, and all of these changes

00:24:14 ◼   ► are all going to be attributed to Satya Nadella, new CEO who's changed the company in 60 days.

00:24:21 ◼   ► That is sort of how it's going to play.

00:24:23 ◼   ► From the outsider's perspective, that's exactly what it looks like.

00:24:27 ◼   ► And yet, when you think, you were talking about some Apple-related stuff, about how

00:24:35 ◼   ► long it takes to build these things. The iPhone didn't come into existence in 60 days. It

00:24:44 ◼   ► took years for it to be developed, years when nobody knew anything about it. And all the

00:24:49 ◼   ► things that we're seeing today have pretty much a year, two, three, five years for a

00:24:57 ◼   ► lot of this stuff. The Azure stuff, that goes back a decade.

00:25:05 ◼   ► It has to because otherwise, I mean,

00:25:06 ◼   ► how many data centers does Azure run in?

00:25:09 ◼   ► Do we have an answer?

00:25:10 ◼   ► - That one I don't know the answer to,

00:25:11 ◼   ► but somebody out there can look it up.

00:25:13 ◼   ► Nine?

00:25:14 ◼   ► - So yeah, so you don't build out nine

00:25:17 ◼   ► like massive world-class billion dollar data centers

00:25:21 ◼   ► you know, in 60 days.

00:25:24 ◼   ► - Nope.

00:25:24 ◼   ► - But do you think that's telling though that they did?

00:25:26 ◼   ► I mean, I do.

00:25:28 ◼   ► I think that it's very telling that they effectively

00:25:30 ◼   ► picked the Azure guy to be the CEO of Microsoft.

00:25:34 ◼   ► Oh, yeah, I mean, that's the direction that it was going.

00:25:37 ◼   ► It was the right choice.

00:25:38 ◼   ► And I think it was the right choice to make, too.

00:25:42 ◼   ► Because if you brought in an outsider,

00:25:48 ◼   ► you've added a random element to it.

00:25:52 ◼   ► And you've created-- you basically--

00:25:54 ◼   ► then you've created a level of uncertainty.

00:25:58 ◼   ► Bringing such in is that, as the CEO says,

00:26:01 ◼   ► basically this train is not slowing down.

00:26:06 ◼   ► In fact, we might speed up a little bit.

00:26:09 ◼   ► - But the name of the game basically is growth.

00:26:11 ◼   ► They gotta find somewhere where they're gonna grow.

00:26:13 ◼   ► And Azure, that whole area of cloud services

00:26:17 ◼   ► is going to grow, clearly.

00:26:19 ◼   ► Somebody's gonna, it's like the old saying,

00:26:21 ◼   ► if somebody's gonna make money,

00:26:23 ◼   ► it might as well be Microsoft.

00:26:25 ◼   ► So somebody's gonna, I mean there's no doubt whatsoever,

00:26:28 ◼   ► I don't think anybody would disagree

00:26:29 ◼   ► no matter how they observe the industry,

00:26:32 ◼   ► cloud computing is gonna grow from here forward.

00:26:36 ◼   ► So it just seems like the most likely source

00:26:40 ◼   ► for Microsoft to have significant growth.

00:26:42 ◼   ► - Well, look at Office for iPad.

00:26:45 ◼   ► I mean, which is really, when you get right down to it,

00:26:47 ◼   ► it's a cloud product.

00:26:49 ◼   ► The only way, yes, it's a free app,

00:26:52 ◼   ► you can download it on your iPad,

00:26:55 ◼   ► and you can view documents,

00:26:57 ◼   ► and you can present a presentation

00:26:58 ◼   ► that you created somewhere else,

00:27:00 ◼   ► and you can save files locally.

00:27:02 ◼   ► But the thing that unlocks the real value of those apps,

00:27:07 ◼   ► which are lovely apps,

00:27:10 ◼   ► and I think they're going to iterate them pretty quickly,

00:27:12 ◼   ► that the thing that unlocks their value

00:27:14 ◼   ► is a subscription to Office 365,

00:27:18 ◼   ► which runs in Azure,

00:27:19 ◼   ► on consumer and business sides.

00:27:24 ◼   ► - Right, 'cause it's more or less like step one

00:27:27 ◼   ► and the whole concept of the iPad Office apps is,

00:27:31 ◼   ► how do you get your documents there?

00:27:33 ◼   ► And it's clearly, you might be able to find workarounds

00:27:37 ◼   ► for other things and you can open an email attachment,

00:27:39 ◼   ► but it's clearly designed to use the--

00:27:44 ◼   ► - OneDrive.

00:27:45 ◼   ► - The OneDrive as the way that you're going to--

00:27:47 ◼   ► - The product previously known as SkyDrive.

00:27:49 ◼   ► - Right.

00:27:50 ◼   ► What's the deal with that?

00:27:51 ◼   ► Why did they change that?

00:27:54 ◼   ► Rupert Murdoch is the short answer.

00:27:57 ◼   ► The long answer is BSkyB,

00:28:00 ◼   ► the British television giant,

00:28:03 ◼   ► owns the Sky trademark,

00:28:08 ◼   ► and they actually have some cloud services of their own.

00:28:11 ◼   ► So they sued Microsoft in the UK

00:28:14 ◼   ► for trademark infringement,

00:28:16 ◼   ► won the first battle,

00:28:18 ◼   ► and Microsoft said rather than appealing this

00:28:20 ◼   ► and potentially losing more expensively,

00:28:23 ◼   ► they signed an agreement to change the name to OneDrive.

00:28:28 ◼   ► - It reminds me of what happened to them

00:28:32 ◼   ► with the Metro name for the new user interface,

00:28:35 ◼   ► where they had this seemingly perfect name

00:28:38 ◼   ► for this thing that needed a name,

00:28:40 ◼   ► and then some kind of trademark lawyers dot dot dot,

00:28:45 ◼   ► you don't want to know,

00:28:46 ◼   ► and now it's like the new interface.

00:28:48 ◼   ► - Yeah, they haven't been very transparent about that one.

00:28:50 ◼   ► and that was a German company, Metro AG, I think,

00:28:54 ◼   ► and I think they're sort of like, I don't know,

00:28:59 ◼   ► German Walmart or something.

00:29:00 ◼   ► They have groceries and computers,

00:29:03 ◼   ► and it was one of those they caved.

00:29:07 ◼   ► They caved on that one,

00:29:08 ◼   ► and ever since they caved on that one,

00:29:11 ◼   ► every discussion of apps that are written for Windows 8,

00:29:17 ◼   ► for the native environment in Windows 8,

00:29:19 ◼   ► and it becomes this awkward thing where you say,

00:29:23 ◼   ► well these modern Windows store, oh, Metro apps.

00:29:27 ◼   ► - Remember the thing where there was,

00:29:31 ◼   ► who owned the trademark to iPhone in 2006?

00:29:35 ◼   ► - Cisco. - Cisco, right.

00:29:37 ◼   ► They even came out with a product in December 2006,

00:29:41 ◼   ► like four weeks before Steve Jobs unveiled the iPhone.

00:29:46 ◼   ► I remember Gizmodo totally, you know,

00:29:49 ◼   ► and that's off to them for doing it,

00:29:50 ◼   ► but they're like, here it is, the iPhone.

00:29:52 ◼   ► (laughing)

00:29:54 ◼   ► And it was a phone, and it was called the iPhone,

00:29:58 ◼   ► but it was like the Cisco iPhone,

00:30:00 ◼   ► and it was like some kind of stupid, like, regular phone,

00:30:04 ◼   ► but somehow you could put it on an IP network.

00:30:08 ◼   ► It was like, clearly somebody at Cisco

00:30:09 ◼   ► who was in these trademark negotiations with Apple

00:30:13 ◼   ► was like, we'd be in a better position

00:30:15 ◼   ► if we had a product using them.

00:30:16 ◼   ► - Just put this stake in the ground.

00:30:19 ◼   ► Anybody have a phone?

00:30:20 ◼   ► And I think they just took one of the phones

00:30:22 ◼   ► and just cut the cable, right?

00:30:25 ◼   ► And they're like, somebody put an ethernet down.

00:30:27 ◼   ► - If you look at it closely, it's actually a Sharpie

00:30:29 ◼   ► that drew iPhone on the back of it.

00:30:32 ◼   ► - And then I remember on stage when he announced it

00:30:36 ◼   ► and he said, you know, it's a phone,

00:30:38 ◼   ► an internet communicator, and you know,

00:30:40 ◼   ► whatever the other-- - iPod.

00:30:42 ◼   ► - Oh, iPod, yeah, a widescreen video iPod.

00:30:45 ◼   ► And yes, we're calling it iPhone.

00:30:47 ◼   ► You could almost hear, like he wanted to say,

00:30:49 ◼   ► "Fuck you, Cisco."

00:30:50 ◼   ► (audience laughs)

00:30:52 ◼   ► Right?

00:30:53 ◼   ► - Exactly.

00:30:53 ◼   ► - I miss that guy.

00:30:56 ◼   ► So, yeah, another thing I have here with Apple,

00:31:03 ◼   ► and Steve Jobs even, and it kinda goes back to the 90s,

00:31:07 ◼   ► and there was the famous Macworld Expo in summer '97,

00:31:16 ◼   ► and Jobs was the I CEO, interim CEO,

00:31:21 ◼   ► and they announced the $150 million investment

00:31:25 ◼   ► from Microsoft in Apple.

00:31:27 ◼   ► - And the crowd booed.

00:31:28 ◼   ► - Yeah.

00:31:29 ◼   ► - At Macworld in Boston, right?

00:31:31 ◼   ► - Yeah, and the giant, like 70 foot Bill Gates

00:31:35 ◼   ► on video behind Steve Jobs.

00:31:37 ◼   ► And there's two things about that

00:31:42 ◼   ► that I've been thinking about this week.

00:31:43 ◼   ► I just saw somebody else,

00:31:44 ◼   ► A lot of people think that that $150 million from Microsoft saved Apple, literally kept them out.

00:31:49 ◼   ► They were close to bankruptcy.

00:31:51 ◼   ► But the $150 million wasn't anywhere near as big a deal in terms of saving them as the

00:31:56 ◼   ► commitment to keep making Office for Mac.

00:32:00 ◼   ► Because that kept the stock up.

00:32:02 ◼   ► Because it was like, well at least it's somewhat...

00:32:04 ◼   ► That was a way bigger deal than the $150 million in cash.

00:32:07 ◼   ► It also kept developers from defecting.

00:32:10 ◼   ► As they said, if Office is available there, then that means that the biggest developer

00:32:16 ◼   ► of productivity software in the world is still committed to it, so we can draft with them.

00:32:22 ◼   ► We can ride their coattails.

00:32:23 ◼   ► The 150 million investment was really symbolic.

00:32:27 ◼   ► And I mean that, I'm not a financial expert, but Apple had been losing billions.

00:32:32 ◼   ► To go from where Apple was in the early '90s where they were flying high to be teetering,

00:32:37 ◼   ► even mentioning the word bankruptcy,

00:32:38 ◼   ► meant they were losing billions.

00:32:41 ◼   ► 150 million, you know, if you're losing billions,

00:32:44 ◼   ► Christ, 150 million, you just lose that in Vegas.

00:32:46 ◼   ► (audience laughs)

00:32:49 ◼   ► It was the commitment to Office that really was like,

00:32:51 ◼   ► you know, hey, Microsoft is still with us,

00:32:53 ◼   ► and if Microsoft's still with us,

00:32:55 ◼   ► you know, maybe you should be too.

00:32:56 ◼   ► But the thing that I remember is that,

00:32:58 ◼   ► and they got booed, like you said,

00:32:59 ◼   ► Steve, you know, they booed this,

00:33:01 ◼   ► and people wanted to fight, and Steve Jobs said,

00:33:04 ◼   ► I'm paraphrasing, but I think I can get it close,

00:33:07 ◼   ► is we have to let go of this notion

00:33:10 ◼   ► that for Apple to win, Microsoft has to lose.

00:33:14 ◼   ► For Apple to win, Apple just has to make great products.

00:33:17 ◼   ► And if other companies want to help us, that's great.

00:33:19 ◼   ► We'll take it, we want friends.

00:33:21 ◼   ► But if we have to do it ourselves, we do,

00:33:23 ◼   ► and we're going to sink or swim, lose or die,

00:33:25 ◼   ► by are we going to make great products?

00:33:28 ◼   ► And I think that's exactly where Microsoft is today.

00:33:33 ◼   ► Although with a significantly better balance sheet.

00:33:35 ◼   ► Right, no, and that's, it's a huge advantage, right?

00:33:38 ◼   ► So, Apple was actually in trouble.

00:33:40 ◼   ► Microsoft is not in trouble.

00:33:41 ◼   ► I'd say what the problem Microsoft has gotten into is more or less like they were in the

00:33:46 ◼   ► doldrums.

00:33:47 ◼   ► They were in the doldrums and you could also see certain product lines that had whatever

00:33:55 ◼   ► the inverse of a hockey stick curve is, you know, where there was a potential they could

00:34:00 ◼   ► you could just go bazing and go down and drop off a cliff.

00:34:05 ◼   ► And anybody who's looking at the desktop software market,

00:34:10 ◼   ► for example, used to be that you could get,

00:34:15 ◼   ► a developer could sell a Windows program

00:34:20 ◼   ► for 30 to $50 fairly easily.

00:34:23 ◼   ► People would pay that.

00:34:25 ◼   ► For a very complex product, you might get 100, $200.

00:34:29 ◼   ► and then Adobe and Microsoft could charge

00:34:33 ◼   ► a lot more than that.

00:34:35 ◼   ► Today, the idea of someone paying $30 for a program

00:34:40 ◼   ► is almost laughable.

00:34:45 ◼   ► If you ask for $10 for an app now,

00:34:47 ◼   ► people go, "That's too expensive."

00:34:51 ◼   ► $5, they might consider it, but man, it better be good,

00:34:57 ◼   ► I don't want to see a single four-star review in there.

00:35:00 ◼   ► And everything else is 99 cents or a buck 99.

00:35:04 ◼   ► And so I think anybody who looked a couple years ago

00:35:08 ◼   ► at where the, just post-iPad and with the App Store

00:35:12 ◼   ► in full swing, you looked at that and you said,

00:35:17 ◼   ► our business is dependent on desktop software

00:35:20 ◼   ► and Windows licenses that cost more than $30.

00:35:25 ◼   ► better figure out how to let that business degrade

00:35:29 ◼   ► and find the one that's going to keep growing?

00:35:34 ◼   ► - I think it's true, I really do.

00:35:36 ◼   ► I think that even when companies get truly big,

00:35:39 ◼   ► and Microsoft is a huge company, Apple is a huge company,

00:35:42 ◼   ► but there's a certain DNA that always dates back

00:35:47 ◼   ► to when it was founded.

00:35:49 ◼   ► And with Apple, it really does go back to this DNA

00:35:52 ◼   ► when it was the two Steves in a garage.

00:35:55 ◼   ► For Microsoft, part of that DNA to me is the whole idea of selling software.

00:36:01 ◼   ► Because in the 70s, there was this nascent personal computing market.

00:36:08 ◼   ► And anybody who was like us and was into computers at the time,

00:36:11 ◼   ► was, "Can't wait! I could have a computer in my house."

00:36:15 ◼   ► And there was, "I want to write, people want to write software for it."

00:36:18 ◼   ► And people would write the software and they would just publish it,

00:36:21 ◼   ► or the source code, and everybody could do it.

00:36:23 ◼   ► And Bill Gates' thing, he had like a letter

00:36:26 ◼   ► that he published in the--

00:36:27 ◼   ► - I was just thinking of that one, you know.

00:36:29 ◼   ► - Homebrew Computing Club.

00:36:30 ◼   ► - Stop stealing software, pay for it.

00:36:32 ◼   ► - Right, his idea was, you know, everybody was saying,

00:36:35 ◼   ► everybody was saying, we could write software

00:36:37 ◼   ► for personal computers.

00:36:37 ◼   ► Bill Gates and Steve Ballmer, you know, together, and--

00:36:42 ◼   ► - And Paul Allen. - And Paul Allen.

00:36:43 ◼   ► Their idea was, we can write software

00:36:45 ◼   ► for personal computers, and we can sell it.

00:36:48 ◼   ► Right, and people thought they were nuts, right?

00:36:50 ◼   ► They were, people thought he was absolutely nuts,

00:36:53 ◼   ► and when he wrote the letter that said,

00:36:54 ◼   ► stop stealing it, we're trying to,

00:36:57 ◼   ► if everybody steals it, we're not gonna be able

00:36:59 ◼   ► to keep making this.

00:37:00 ◼   ► And they were like, well, nobody's gonna pay for software.

00:37:04 ◼   ► And he was right, but that's their DNA,

00:37:07 ◼   ► and the world is really kind of shifting away from that.

00:37:10 ◼   ► - Yeah, well, the other thing,

00:37:12 ◼   ► the other interesting thing about the DNA of the company,

00:37:15 ◼   ► and it's unique to Microsoft,

00:37:20 ◼   ► was what happened in 1997 to 2001 with the antitrust trial

00:37:30 ◼   ► that resulted in the big settlement

00:37:35 ◼   ► agreement, settlement decree.

00:37:37 ◼   ► And then that was followed by a couple of antitrust suits

00:37:43 ◼   ► in Europe.

00:37:45 ◼   ► And so I think the other--

00:37:46 ◼   ► the interesting thing about Microsoft

00:37:48 ◼   ► is they still have that sort of founder's DNA in them,

00:37:51 ◼   ► but they also have this--

00:37:54 ◼   ► they were brutalized by those lawsuits.

00:37:59 ◼   ► They were forced to change just about every business practice

00:38:05 ◼   ► that had made them successful.

00:38:08 ◼   ► Some of them, it's a good thing that those business practices

00:38:11 ◼   ► were changed because they were abusive monopoly power.

00:38:14 ◼   ► In other cases, they were things that we take as commonplace today.

00:38:18 ◼   ► An operating system has a browser in it.

00:38:22 ◼   ► But the consent decree said you have to separate the browser from the operating system and

00:38:29 ◼   ► you have to provide a mechanism for alternative browsers or malware.

00:38:33 ◼   ► Microsoft's argument at the trial that the browser belongs as part of the operating system

00:38:40 ◼   ► was widely mocked by critics.

00:38:44 ◼   ► And they made the argument in a very ham-handed fashion.

00:38:50 ◼   ► This terrible demo by Jim Alchin,

00:38:54 ◼   ► who it was a videotape deposition,

00:38:58 ◼   ► and they discovered afterwards that the government, David

00:39:03 ◼   ► Boyce and his team, found that they had spliced--

00:39:07 ◼   ► they had cut things out of this video.

00:39:12 ◼   ► And when they got to see the whole thing,

00:39:14 ◼   ► it kind of changed the story.

00:39:16 ◼   ► And it made them look worse.

00:39:19 ◼   ► It made them look dishonest, like they

00:39:20 ◼   ► were trying to hide something.

00:39:22 ◼   ► There was actually a legitimate story to tell.

00:39:25 ◼   ► They had the truth on their side.

00:39:26 ◼   ► They had the truth on their side.

00:39:30 ◼   ► But that early DNA was win at any cost, which

00:39:34 ◼   ► is what got them in trouble.

00:39:36 ◼   ► So I think now, a lot of people still

00:39:39 ◼   ► have the belief that Microsoft is this cutthroat, win

00:39:42 ◼   ► at any cost company.

00:39:44 ◼   ► And they have this image of the hard charging, rule busting

00:39:49 ◼   ► Microsoft of the '90s.

00:39:51 ◼   ► But the Microsoft that I know from today and the last eight

00:39:56 ◼   ► to 10 years is one that is hypersensitive to rules

00:40:02 ◼   ► and legal processes and will bend over the other direction

00:40:07 ◼   ► to avoid the appearance, and even then,

00:40:10 ◼   ► they still get nailed in the EU

00:40:13 ◼   ► for things that they thought they had covered.

00:40:18 ◼   ► - Right.

00:40:18 ◼   ► One of the ways, clearly, that Microsoft

00:40:24 ◼   ► is different from Apple, and that this conference

00:40:27 ◼   ► is very different from WWDC, is that,

00:40:30 ◼   ► just the mere fact that you're still here.

00:40:31 ◼   ► This is day two of the conference.

00:40:33 ◼   ► There's a couple of press rooms.

00:40:34 ◼   ► We're actually recording a show in one of the press rooms,

00:40:36 ◼   ► but there's a press room next door

00:40:37 ◼   ► and a press room next door.

00:40:39 ◼   ► So you've been here for two days, right?

00:40:42 ◼   ► - Yep. - And you're here all day.

00:40:44 ◼   ► At WWDC, when you have a press badge,

00:40:46 ◼   ► you come to the morning keynote,

00:40:48 ◼   ► which is only 90 minutes, Microsoft.

00:40:52 ◼   ► (audience laughing)

00:40:55 ◼   ► - Yesterday's keynote could have been,

00:40:57 ◼   ► I think they could have cut the big sequence

00:41:01 ◼   ► with Joe Belfiore playing the giant piano

00:41:05 ◼   ► connected to a telnet window.

00:41:08 ◼   ► That was a little weird.

00:41:11 ◼   ► - But the press comes in, there's a 90 minute keynote

00:41:14 ◼   ► that is largely devoid of technical information.

00:41:17 ◼   ► They segregate, there is like,

00:41:20 ◼   ► they don't call it a keynote,

00:41:21 ◼   ► but there's effectively after lunch on day one,

00:41:24 ◼   ► here's the tech keynote,

00:41:25 ◼   ► and here's where we're gonna show Xcode,

00:41:27 ◼   ► and we're gonna show source code,

00:41:29 ◼   ► and we're gonna do nerdy stuff.

00:41:31 ◼   ► But the morning keynote is very, very layperson, consumery.

00:41:35 ◼   ► and they flush Moscone, I mean you're out,

00:41:38 ◼   ► like when that keynote is over, everybody's out,

00:41:42 ◼   ► including badge holders, everybody's out,

00:41:44 ◼   ► and that's to make sure all the press are out,

00:41:46 ◼   ► and then you can't get back in.

00:41:48 ◼   ► Once that morning keynote is over,

00:41:50 ◼   ► and you go down the escalator, you're--

00:41:52 ◼   ► - Unless you've paid for a developer's badge.

00:41:54 ◼   ► - Right.

00:41:55 ◼   ► - And then you can go into the sessions.

00:41:56 ◼   ► - Right, so that's like, last couple of years,

00:41:59 ◼   ► I've done that, but I pay for it.

00:42:00 ◼   ► It's not included, you know, my press badge is free,

00:42:03 ◼   ► you develop a relationship and you get in for free,

00:42:07 ◼   ► but to come to anything else the rest of the week,

00:42:09 ◼   ► you need a paid badge.

00:42:11 ◼   ► And in fact, if anybody suspects that maybe

00:42:14 ◼   ► they helped me or something like that,

00:42:15 ◼   ► I think that they don't like it when press people buy them.

00:42:18 ◼   ► 'Cause I don't, you're under NDA,

00:42:21 ◼   ► everything's under NDA anyway,

00:42:22 ◼   ► but they think, why are the press coming into these things

00:42:26 ◼   ► unless they wanna write about it,

00:42:27 ◼   ► and we don't want them writing about it, it's under NDA.

00:42:29 ◼   ► - Right, yeah, I mean, there again is a difference

00:42:33 ◼   ► in just sort of the institutional mentality

00:42:37 ◼   ► of the two companies.

00:42:40 ◼   ► So the interesting thing about WWDC,

00:42:43 ◼   ► I've never been to one, but I've watched them,

00:42:47 ◼   ► the live streams of them.

00:42:50 ◼   ► Apple is primarily a consumer company,

00:42:53 ◼   ► and so that keynote is almost a commercial.

00:42:56 ◼   ► - No, definitely.

00:42:57 ◼   ► - Especially when Steve Jobs was doing the things.

00:43:03 ◼   ► And then the developer stuff is like,

00:43:06 ◼   ► don't look behind the curtain kind of stuff.

00:43:08 ◼   ► You don't really want consumers to know about this stuff

00:43:12 ◼   ► because you want it to be magical.

00:43:14 ◼   ► The Microsoft thing, first of all,

00:43:17 ◼   ► it's primarily business focused.

00:43:20 ◼   ► Although, they would like, Xbox, of course,

00:43:25 ◼   ► is a great consumer success,

00:43:29 ◼   ► and they would like the new PC form factors

00:43:32 ◼   ► to be consumer successes as well,

00:43:34 ◼   ► but when you get right down to it,

00:43:35 ◼   ► most of the developers here are writing software

00:43:39 ◼   ► for business users, sometimes for internal enterprise apps

00:43:44 ◼   ► and stuff, so that you get that consumer

00:43:47 ◼   ► versus business thing, you also have

00:43:49 ◼   ► the open versus secret thing,

00:43:52 ◼   ► and Apple thrives on, you know,

00:43:55 ◼   ► it's consumer business is one of its key strategic advantages

00:44:01 ◼   ► its ability to keep a secret.

00:44:02 ◼   ► And Microsoft has tried that in the last couple of years,

00:44:06 ◼   ► and it's backfired.

00:44:09 ◼   ► And so the one thing that we have seen this week here

00:44:13 ◼   ► is more of a willingness to talk about the future,

00:44:16 ◼   ► to outline roadmaps, even if they don't have dates on them.

00:44:19 ◼   ► At least, this is going to continue to be supported.

00:44:23 ◼   ► This thing is coming in a future update to Windows.

00:44:28 ◼   ► But we won't tell you exactly when,

00:44:30 ◼   ► but you can look forward to it.

00:44:31 ◼   ► And so you're seeing a little bit more of that now.

00:44:34 ◼   ► And that's really, it has to be,

00:44:36 ◼   ► especially for that cross-device, cross-platform world,

00:44:40 ◼   ► you have to be more open.

00:44:42 ◼   ► Secrecy just isn't going to work.

00:44:44 ◼   ► - Right.

00:44:45 ◼   ► So like, and it's the best example I can think of.

00:44:47 ◼   ► So Microsoft came to me and they knew that I was coming

00:44:51 ◼   ► for the Azure thing with Vesper,

00:44:55 ◼   ► and said, "Hey, would you like to do your podcast here

00:44:59 ◼   ► and we're gonna have people do it, we'll give you a room,

00:45:01 ◼   ► we'll give you a mic, we'll give you a beer.

00:45:04 ◼   ► And there was no other strings attached.

00:45:06 ◼   ► It wasn't like, here's what we want you to talk about,

00:45:08 ◼   ► or here's what you can or can't.

00:45:09 ◼   ► It was like, do you want the room?

00:45:10 ◼   ► Like, the odds of Apple offering that to say you,

00:45:15 ◼   ► well, they wouldn't even offer it to me,

00:45:18 ◼   ► but the odds that they're gonna say,

00:45:19 ◼   ► hey Ed Baugh, would you like to do a podcast

00:45:22 ◼   ► from within Moscone West at 4.30 on Wednesday at WWDC.

00:45:28 ◼   ► I'd say that's when the meteor hits San Francisco.

00:45:32 ◼   ► Right, you should immediately call your broker

00:45:35 ◼   ► and short apple because clearly--

00:45:37 ◼   ► Something seriously wrong here.

00:45:39 ◼   ► --two cookies hit the sauce.

00:45:42 ◼   ► Yeah, so just fundamental differences.

00:45:44 ◼   ► Very different.

00:45:47 ◼   ► Now, a word from our sponsors.

00:45:50 ◼   ► John again, interrupting just to tell you about another one

00:45:54 ◼   ► of our great sponsors.

00:45:56 ◼   ► I want to tell you about Branchfire.

00:45:58 ◼   ► It's just like a theme this week with the sponsors.

00:46:01 ◼   ► Everybody's on fire.

00:46:02 ◼   ► We had Backblaze, now we have Branchfire.

00:46:04 ◼   ► But don't get them confused, totally different company.

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00:46:21 ◼   ► and it's still, right now, today,

00:46:23 ◼   ► among the top productivity apps on the App Store.

00:46:26 ◼   ► iAnnotate lets users read, mark up, organize, and share documents right from their iPads.

00:46:34 ◼   ► Over one million people worldwide, from students and teachers to Hollywood actors and screenwriters,

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00:46:45 ◼   ► With killer features and awesome support, iAnnotate has become the productivity app

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00:46:54 ◼   ► surprised to me that it's an iPad app. I think if there's one area where the iPad really

00:46:59 ◼   ► stands out as it just a tremendous device, it's about you know, compared to iPhones,

00:47:04 ◼   ► and even Macs is for reading PDFs. Because it is it in your hands. It's like the size

00:47:10 ◼   ► of a piece of paper and PDF, you know, it's sort of an eight and a half by 11. Or for

00:47:15 ◼   ► those of you in Europe, what do you guys call it a for roughly that size device, and it

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00:48:05 ◼   ► If you use PDFs and you have an iPad you've got to check it out. Really good

00:48:08 ◼   ► app. So my thanks to Branchfire. Now back to the show. So let's talk a little bit

00:48:16 ◼   ► about some of the news from this week.

00:48:18 ◼   ► I think, to me the thing that stuck out the most,

00:48:20 ◼   ► that is the most intriguing to me is Windows Phone 8.1.

00:48:23 ◼   ► - Right.

00:48:24 ◼   ► - And I said when I linked to it, just short and sweet

00:48:28 ◼   ► 'cause I was pecking it out on my phone,

00:48:30 ◼   ► but that to me it looks like from Windows 8 to 8.1

00:48:34 ◼   ► has more new stuff than Windows 7 to Windows 8.

00:48:38 ◼   ► - Yeah, and what's fascinating,

00:48:40 ◼   ► I agree with that assessment completely,

00:48:44 ◼   ► And what's interesting is if you,

00:48:45 ◼   ► I suspect if you went and talked to someone

00:48:48 ◼   ► on the Windows Phone kernel team,

00:48:51 ◼   ► they would be happy to explain to you

00:48:52 ◼   ► why the kernel changes and the architecture changes

00:48:56 ◼   ► from seven to eight were different.

00:49:00 ◼   ► In fact, they broke compatibility.

00:49:02 ◼   ► They angered people with that one.

00:49:05 ◼   ► And so that was, it looked like almost nothing

00:49:09 ◼   ► from the user experience side,

00:49:11 ◼   ► but it was huge from the kernel side.

00:49:14 ◼   ► But once you have that, and again,

00:49:16 ◼   ► this is one of those things,

00:49:18 ◼   ► they were talking about this three or four years ago,

00:49:21 ◼   ► and now the user interface stuff was made possible,

00:49:26 ◼   ► the rapid iteration in user interface stuff

00:49:29 ◼   ► was made possible by the kernel work

00:49:31 ◼   ► that they did back then.

00:49:33 ◼   ► And in fact, they're now bringing the APIs together

00:49:38 ◼   ► for phone and Windows tablets and Windows desktops

00:49:43 ◼   ► desktops, and even Xbox.

00:49:46 ◼   ► So that I think the official numbers like 92% of the APIs are common for those.

00:49:53 ◼   ► So basically, you know, the pitch is that you can write an app, you know, it's not exactly

00:50:01 ◼   ► the old write once, run anywhere thing, but it's write once and have a relatively easy

00:50:07 ◼   ► time of porting it to other members of the same family.

00:50:12 ◼   ► that the only differences are the things

00:50:13 ◼   ► that are obviously different.

00:50:15 ◼   ► The screen is much bigger.

00:50:16 ◼   ► Or if it's for the Xbox, it's not touch,

00:50:20 ◼   ► it's going to be an Xbox controller.

00:50:23 ◼   ► - And you have a cellular radio in one device

00:50:25 ◼   ► that's most likely not in any of those other devices.

00:50:27 ◼   ► - The differences are the actual differences

00:50:29 ◼   ► in the devices that the--

00:50:31 ◼   ► - Yeah, and so one of my favorite apps,

00:50:34 ◼   ► I think it should be a showcase app for Windows 8,

00:50:40 ◼   ► in fact, is one called Tweedium.

00:50:43 ◼   ► Tweedium.

00:50:44 ◼   ► Written by a guy named Brandon Paddock.

00:50:49 ◼   ► It's just an amazing app, and I noticed

00:50:52 ◼   ► he had taken his Windows 8 app.

00:50:54 ◼   ► Yesterday he got the Windows Phone 8.1 bits and the SDK,

00:51:00 ◼   ► and today he was showing a running version of Tweedium

00:51:04 ◼   ► on Windows Phone 8.1.

00:51:06 ◼   ► Which is, so I mean, it's kind of a,

00:51:09 ◼   ► a validation of their story.

00:51:13 ◼   ► Clearly, a flagship feature, big part of the keynote yesterday, a lot of the news is Cortana,

00:51:21 ◼   ► which of course inevitably was immediately headlined everywhere as "Ciri Killer," which

00:51:27 ◼   ► is the worst, the killer thing, everybody, killer should be one of those words where

00:51:30 ◼   ► if you're CMS, if you put it in a headline, it should immediately like autocorrect, it

00:51:36 ◼   ► just zaps, it just goes away.

00:51:37 ◼   ► Actually, I think there should probably

00:51:39 ◼   ► be low voltage electrical on the keys.

00:51:44 ◼   ► And it just gives you a shock.

00:51:47 ◼   ► So it's like one of those collars that keeps you from--

00:51:50 ◼   ► keeps your dog from running outside your property line.

00:51:53 ◼   ► It should keep you from not typing that word again.

00:51:55 ◼   ► Right.

00:51:56 ◼   ► You really should not be able to put killer in a headline

00:51:59 ◼   ► unless you have a police report that shows

00:52:02 ◼   ► that there's a dead body.

00:52:03 ◼   ► Chalk marks.

00:52:06 ◼   ► And anyway, I think that's one of those things,

00:52:10 ◼   ► if you look at it for 10 seconds, you might say,

00:52:13 ◼   ► oh, Siri is Cortana.

00:52:14 ◼   ► Well, they're both this sort of pulsing thing on the phone

00:52:17 ◼   ► and a female voice.

00:52:19 ◼   ► But really, what's interesting about Cortana

00:52:23 ◼   ► is that it's sort of a fairly artful mashup of Siri and Google

00:52:30 ◼   ► now because it has the--

00:52:35 ◼   ► a lot of it is you're giving--

00:52:37 ◼   ► you can give Cortana permission to access your schedule,

00:52:44 ◼   ► your email, your text messages, your phone book and addresses,

00:52:50 ◼   ► and on and on and on.

00:52:51 ◼   ► You're browsing history and all of that stuff.

00:52:56 ◼   ► And so you can get Google Now type smart notifications

00:53:01 ◼   ► that you never had to explicitly ask for delivered

00:53:05 ◼   ► through a Siri-like interface.

00:53:07 ◼   ► And so that's kind of--

00:53:09 ◼   ► that, I think, is really the innovation in it.

00:53:13 ◼   ► It's neither one nor the other.

00:53:16 ◼   ► Yeah, I think that it inevitably happens

00:53:20 ◼   ► that whoever ships first can claim

00:53:24 ◼   ► to be ripped off going forward.

00:53:26 ◼   ► but the idea of voice-driven computing is not new,

00:53:30 ◼   ► and so Siri shipped before Cortana

00:53:33 ◼   ► and Google Now shipped in between,

00:53:36 ◼   ► but Google had something else before Siri.

00:53:38 ◼   ► - We've got 2001 and WarGames as prior art.

00:53:43 ◼   ► - One of the things that I thought was interesting

00:53:48 ◼   ► about Cortana though, and I'm not 100%,

00:53:51 ◼   ► but I think my understanding of the way it works though

00:53:55 ◼   ► is that Cortana runs largely or maybe even entirely

00:53:58 ◼   ► on the device.

00:53:58 ◼   ► - Correct.

00:53:59 ◼   ► - Which is a very, forget Siri, but compared to Google Now,

00:54:04 ◼   ► where it's here's all of your information sent to Google,

00:54:08 ◼   ► and most of the compute happens with Google Cloud stuff

00:54:13 ◼   ► looking at your data and figuring this stuff out,

00:54:16 ◼   ► whereas with Cortana, it's on your phone,

00:54:19 ◼   ► and your email's on your phone--

00:54:20 ◼   ► - Especially with the email thing.

00:54:21 ◼   ► So Cortana is only allowed to read email on your phone,

00:54:24 ◼   ► And that cannot be transmitted to the service.

00:54:30 ◼   ► And so it's a fundamental--

00:54:34 ◼   ► really a fundamental difference between the two services.

00:54:39 ◼   ► Google says we want all of your information.

00:54:43 ◼   ► We want it on--

00:54:46 ◼   ► your Google account allows you to put all of this

00:54:51 ◼   ► on our servers and we will aggregate it.

00:54:54 ◼   ► And then-- and it's a black box at that point.

00:54:58 ◼   ► Because the other interesting feature about Cortana

00:55:02 ◼   ► that I'm not sure made it into too many of the stories

00:55:05 ◼   ► there is that there is an interface called

00:55:07 ◼   ► Cortana's Notebook.

00:55:09 ◼   ► I saw that.

00:55:09 ◼   ► And so Cortana's Notebook is taken from the idea

00:55:13 ◼   ► that apparently the developers of Cortana

00:55:16 ◼   ► interviewed a bunch of actual personal assistants

00:55:19 ◼   ► of executives and said, how do you keep your boss looking

00:55:27 ◼   ► smart and on schedule throughout the day?

00:55:30 ◼   ► And they said, well, we have a notebook

00:55:32 ◼   ► where we have all this stuff about him

00:55:35 ◼   ► that we know about him or her.

00:55:38 ◼   ► And so they've replicated that thing there.

00:55:42 ◼   ► But the most salient feature of Cortana's notebook

00:55:47 ◼   ► is the ability to say, remove that.

00:55:51 ◼   ► Or include this thing that you didn't see.

00:55:55 ◼   ► So you have control over the stuff that's in there.

00:55:58 ◼   ► Now, with most products like this,

00:56:01 ◼   ► where you give the customer the ability to tweak the thing,

00:56:07 ◼   ► we know from experience that 80% to 90%

00:56:09 ◼   ► of the people who use it will never look at that.

00:56:13 ◼   ► but for the 10% or 15 or 20 for whom that's important,

00:56:18 ◼   ► it's really important.

00:56:19 ◼   ► And the idea, you can go in there and say,

00:56:21 ◼   ► I don't want, I just don't want you

00:56:25 ◼   ► to have that information at all.

00:56:29 ◼   ► I don't want that to be part of my profile,

00:56:31 ◼   ► and you can do that.

00:56:33 ◼   ► - Yeah, it seems like a big difference,

00:56:34 ◼   ► and I'm really intrigued to see once it gets out

00:56:37 ◼   ► in the real world how people's reaction is to it,

00:56:40 ◼   ► because clearly that, for better or for worse,

00:56:43 ◼   ► the story with Syria was announced

00:56:46 ◼   ► and it looked really cool, and then it shipped,

00:56:49 ◼   ► and a lot of people clearly found that it did not quite work

00:56:54 ◼   ► as it was advertised.

00:56:56 ◼   ► I think it's gotten a lot better.

00:56:57 ◼   ► I think it's one of those things where, yes,

00:56:59 ◼   ► clearly they pitched it in the nicest light.

00:57:01 ◼   ► - But you don't get a second chance

00:57:06 ◼   ► to make a first impression. - Right, exactly.

00:57:07 ◼   ► It's gotten noticeably better over the last two years,

00:57:11 ◼   ► but in little tiny, the way that cloud stuff gets better.

00:57:16 ◼   ► Little bit here, little bit there, little bit faster here.

00:57:19 ◼   ► They call it Siri, but Siri's really the personal assistant,

00:57:25 ◼   ► but Apple calls it Siri when you do the text-to-speech,

00:57:29 ◼   ► or speech-to-text dictation.

00:57:32 ◼   ► That works so much better than it did when they shipped.

00:57:34 ◼   ► Like when I'm in, it's winter and my hand is cold

00:57:37 ◼   ► and I'm walking in Philadelphia, and I

00:57:39 ◼   ► want to quick dictate a text to my wife or something,

00:57:42 ◼   ► works so good.

00:57:43 ◼   ► It really does.

00:57:45 ◼   ► But it's too late.

00:57:46 ◼   ► They don't get credit for it now because--

00:57:49 ◼   ► Well, I think the other difference between the two

00:57:51 ◼   ► things, and another thing that probably didn't make it

00:57:55 ◼   ► into too many of the news stories today,

00:57:58 ◼   ► is that Cortana is extensible.

00:58:00 ◼   ► Yes.

00:58:02 ◼   ► So third party apps can hook into Cortana,

00:58:07 ◼   ► and so there's APIs for an app to be able

00:58:12 ◼   ► to have Cortana as a front end.

00:58:18 ◼   ► - Right, and so it's officially beta,

00:58:20 ◼   ► they're calling it beta.

00:58:21 ◼   ► - They're launching it as a beta with Windows Phone 8.1.

00:58:23 ◼   ► - But it's going to ship as part of 8.1, right?

00:58:26 ◼   ► - Right.

00:58:27 ◼   ► - 'Cause Apple called Siri beta two,

00:58:28 ◼   ► I think it's just a way of saying,

00:58:29 ◼   ► look, this stuff might not work great

00:58:31 ◼   ► until we have a couple months under our wings of--

00:58:35 ◼   ► - Well I think Google did, how long was Gmail in beta?

00:58:38 ◼   ► - Everything at Google is still beta.

00:58:41 ◼   ► I'm pretty sure Google searches still beta.

00:58:43 ◼   ► But they're definitely going to beat Apple

00:58:50 ◼   ► to developer extensibility because Siri

00:58:53 ◼   ► is not developer extensible at all.

00:58:55 ◼   ► There is no integration with third party apps.

00:58:58 ◼   ► So even if Apple announces it at WWDC this year,

00:59:03 ◼   ► which is, it's gonna be first week of June,

00:59:05 ◼   ► that's not gonna ship until the new OS comes out,

00:59:08 ◼   ► which is probably gonna be when the phone,

00:59:10 ◼   ► if they stick to the same schedule as last couple years.

00:59:12 ◼   ► - September, October. - September, October.

00:59:14 ◼   ► And Cortana's gonna be out before then,

00:59:17 ◼   ► and they're, a version, this sort of idea,

00:59:20 ◼   ► voice-driven, personal assistant,

00:59:23 ◼   ► but they're gonna, Microsoft's gonna have

00:59:25 ◼   ► third-party integration before Apple.

00:59:27 ◼   ► And that's if Apple does it this year.

00:59:30 ◼   ► - Right, and there's another thing that Cortana has

00:59:33 ◼   ► that Siri doesn't that Google now does.

00:59:39 ◼   ► And it's kind of a big punch in the nose

00:59:44 ◼   ► to everyone who, all these pundits who are saying

00:59:48 ◼   ► Microsoft needs to get rid of Bing.

00:59:50 ◼   ► Bing's just a drag on the business.

00:59:53 ◼   ► Basically, Bing is--

00:59:57 ◼   ► Cortana sits on top of Bing.

01:00:01 ◼   ► And Bing is not just a search engine

01:00:03 ◼   ► that delivers a list of results.

01:00:06 ◼   ► It has-- there's a tremendous amount of semantic knowledge

01:00:11 ◼   ► in the back end.

01:00:12 ◼   ► So if you ask for what's the best restaurant that's

01:00:18 ◼   ► within a 10-minute walk of me, it

01:00:21 ◼   ► can pull that up from Yelp and give you that answer.

01:00:26 ◼   ► It has access to a lot of sources of data,

01:00:32 ◼   ► the kind of things that appear in the info box

01:00:35 ◼   ► of a search results page that it can also use as answers

01:00:40 ◼   ► to a question that you ask it.

01:00:44 ◼   ► And so those become very competitive advantages

01:00:48 ◼   ► that are there because of the so-called losses

01:00:52 ◼   ► that Microsoft took on Bing for all these years.

01:00:56 ◼   ► If you think of Bing as, you know,

01:00:59 ◼   ► bing.com versus google.com, those are losses.

01:01:02 ◼   ► If you think of that as a sort of product, a consumer product

01:01:09 ◼   ► that was sort of helping to pay for the incredible investment

01:01:15 ◼   ► in information on the back end

01:01:17 ◼   ► that was ultimately going to drive a service like Cortana,

01:01:20 ◼   ► then it's not a loss, it's an investment.

01:01:22 ◼   ► - Right, it's all, you know, seems like science fiction

01:01:25 ◼   ► until we have it and then it seems boring

01:01:27 ◼   ► and we complain about it.

01:01:29 ◼   ► But you know, like you said, Hal from 2001, 1968,

01:01:34 ◼   ► we're getting there, you know, we're getting there

01:01:36 ◼   ► where you just talk to the computer

01:01:38 ◼   ► and the computer gives you answers.

01:01:41 ◼   ► And having something like Bing gives Microsoft

01:01:43 ◼   ► a serious leg up over Apple, which doesn't have that,

01:01:47 ◼   ► and doesn't want to use Google to do it.

01:01:51 ◼   ► - Right, I mean, Apple has already demonstrated with maps

01:01:54 ◼   ► that it would like to sever potentially life-threatening

01:01:59 ◼   ► connections, you know, because if, you know,

01:02:05 ◼   ► maps are such a crucial component of a mobile device.

01:02:08 ◼   ► - Apple does it a little bit, I mean, you know,

01:02:10 ◼   ► they're not totally going it alone.

01:02:12 ◼   ► Siri has integration with Wolfram Alpha for a lot of stuff.

01:02:16 ◼   ► So if you ask Siri for stock quotes, I think she goes to Wolfram Alpha.

01:02:20 ◼   ► Maybe not, she might just go to the widget.

01:02:21 ◼   ► But I know if you just do math, if you just ask her math questions,

01:02:24 ◼   ► she goes to Wolfram Alpha and the results come back from them.

01:02:27 ◼   ► But I can't help but think, and this is one of the thoughts I've had the last two days here at Build,

01:02:33 ◼   ► is I again think back to the iPhone introduction in 2007.

01:02:39 ◼   ► and Steve Jobs introed it, it was amazing,

01:02:41 ◼   ► the audience was blown away, and he said,

01:02:43 ◼   ► "Now I'm gonna invite some friends up there."

01:02:44 ◼   ► And his first friend that came out was Eric Schmidt,

01:02:46 ◼   ► then board member. (audience laughs)

01:02:48 ◼   ► And they hugged each other, and they're laughing,

01:02:50 ◼   ► and it was all smiles, and the gist of what Steve Jobs said

01:02:55 ◼   ► is, "Hey, Google's our great friend,

01:02:57 ◼   ► "and they do some amazing things.

01:02:58 ◼   ► "We do totally different amazing things.

01:03:01 ◼   ► "We build these great little devices

01:03:03 ◼   ► "with really beautiful user interface.

01:03:05 ◼   ► "They do search, and they've got maps,

01:03:07 ◼   ► and they've got this YouTube thing,

01:03:09 ◼   ► so we'll just use them for all that stuff,

01:03:11 ◼   ► and then we don't have to worry about it.

01:03:12 ◼   ► - Kumbaya.

01:03:13 ◼   ► - Right, and then you all know how that worked out,

01:03:16 ◼   ► but I can't help but feel like,

01:03:17 ◼   ► well I'm at build this week,

01:03:18 ◼   ► like you said, go back to the Venn diagram thing,

01:03:22 ◼   ► I can't help but think that there's a no harm done,

01:03:26 ◼   ► Apple, you could concentrate on what you do best

01:03:30 ◼   ► if maybe you went to your pals at Microsoft a little more.

01:03:36 ◼   ► I don't think that's such a bad idea.

01:03:39 ◼   ► There's a little bit of the enemy of my enemy

01:03:41 ◼   ► is my friend in there.

01:03:43 ◼   ► Apple and Microsoft are in sufficiently different worlds,

01:03:51 ◼   ► and both face really brutal competition from Google.

01:03:56 ◼   ► And so there's always been this--

01:03:59 ◼   ► it's always been remarkable to me,

01:04:01 ◼   ► As much as the tech press and our readers

01:04:06 ◼   ► might like to think that there's this blood war

01:04:10 ◼   ► between the two camps, it's really--

01:04:13 ◼   ► that hasn't been a thing for a long time.

01:04:15 ◼   ► Yeah, but I think it is.

01:04:16 ◼   ► And like you said, in very different ways,

01:04:18 ◼   ► it is true, though, between both companies and Google.

01:04:21 ◼   ► I mean, an enemy is maybe a strong word,

01:04:23 ◼   ► but if we want to use that analogy

01:04:27 ◼   ► and sort of go a little over the top, it's true.

01:04:30 ◼   ► I think Apple's biggest enemy is Google

01:04:33 ◼   ► and Microsoft's biggest enemy is Google.

01:04:35 ◼   ► - Well, on the Windows platform,

01:04:37 ◼   ► Google has been obstinate about refusing

01:04:44 ◼   ► to support Windows 8.

01:04:46 ◼   ► There is exactly one Google app for Windows 8,

01:04:50 ◼   ► Google Search.

01:04:50 ◼   ► It has some other stuff embedded in it,

01:04:53 ◼   ► so you can use it there, but there's no Gmail app,

01:04:55 ◼   ► there's no-- - YouTube.

01:04:57 ◼   ► - There's no YouTube.

01:04:58 ◼   ► In fact, there's a whole--

01:05:00 ◼   ► you could write a sitcom about the whole YouTube controversy

01:05:05 ◼   ► there.

01:05:05 ◼   ► Google cannot ignore the Mac, and it cannot ignore the iPad

01:05:10 ◼   ► because the overlap between their two audiences are--

01:05:15 ◼   ► people use Apple-branded hardware

01:05:18 ◼   ► and Google-branded services.

01:05:21 ◼   ► And there's a huge influential and wealthy portion

01:05:26 ◼   ► of the population, especially in the United States,

01:05:29 ◼   ► that that defines.

01:05:30 ◼   ► So Google can't afford to alienate Apple users too much,

01:05:37 ◼   ► but they can afford to piss off Windows users

01:05:41 ◼   ► and hopefully drive them, say, "Hey, it's not us."

01:05:47 ◼   ► - In a lot of ways, it seems largely spiteful.

01:05:49 ◼   ► Part of the sitcom you describe is that Microsoft said,

01:05:53 ◼   ► "Okay, we'll write the app,"

01:05:54 ◼   ► and they wrote a YouTube app and then Google...

01:05:59 ◼   ► Found an excuse.

01:06:00 ◼   ► Right, and yanked the APIs away and said no.

01:06:02 ◼   ► Even though there was a...

01:06:04 ◼   ► We're not even asking you to do the work.

01:06:05 ◼   ► We made the app, it's here.

01:06:07 ◼   ► Yeah, it was nuts.

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01:08:45 ◼   ► - The other interesting thing about Windows Phone 8.1 is,

01:08:50 ◼   ► and I found this a little surprising,

01:08:52 ◼   ► I guess it's not shocking but surprising,

01:08:54 ◼   ► is that Microsoft announced that on nine inch tablets

01:08:58 ◼   ► and smaller and on phones, it is now going to be free.

01:09:01 ◼   ► Or there's a version of it.

01:09:02 ◼   ► - Yeah, that's the one, you know, I need to go back

01:09:04 ◼   ► and read the transcript and watch that again,

01:09:07 ◼   ► because it might be one of those things

01:09:08 ◼   ► where the devil is in the details there.

01:09:11 ◼   ► I think they said something like there's going to be a,

01:09:15 ◼   ► we'll make a Windows that will be free.

01:09:19 ◼   ► I think $0 was what they put on the slide on the screen.

01:09:24 ◼   ► And it was one of those where you say it the right way

01:09:27 ◼   ► and everyone, it's the classic magician's trick,

01:09:31 ◼   ► misdirection, focus on the $0 up there

01:09:33 ◼   ► and miss the caveat there.

01:09:35 ◼   ► It may be that this is the ad supported version of Windows

01:09:41 ◼   ► that they've talked about through the years.

01:09:45 ◼   ► But whether it's that or whether it's something else,

01:09:49 ◼   ► the fact is that they've basically--

01:09:51 ◼   ► that is a direct shot across the bow of Android.

01:09:55 ◼   ► Right.

01:09:56 ◼   ► That is nothing to do with Apple and the iPhone

01:09:59 ◼   ► and everything to do with Android.

01:10:01 ◼   ► And to me, it's one of the biggest mysteries

01:10:03 ◼   ► in all of marketing, any field, tech or whatever.

01:10:05 ◼   ► But certainly, tech is where I obsess over it more,

01:10:07 ◼   ► is when certain products either seemingly get

01:10:12 ◼   ► a lot more traction than they seem to deserve,

01:10:17 ◼   ► or the flip side when there's a product

01:10:19 ◼   ► that doesn't seem to get the traction it deserves.

01:10:22 ◼   ► And to me Windows Phone, absolutely,

01:10:25 ◼   ► I'm not just saying it 'cause I'm here at Build,

01:10:27 ◼   ► I really do think it's a far better product

01:10:30 ◼   ► than its market share indicates, like not even close.

01:10:35 ◼   ► - Right.

01:10:36 ◼   ► seems like the phone market is so weird and even on just the Android side alone, just

01:10:41 ◼   ► Android, it just like HTC makes what are clearly to me the most beautiful Android phones and

01:10:49 ◼   ► they're just getting killed by Samsung.

01:10:52 ◼   ► And even if it's, you know, you could make an argument that Samsung for technical reasons

01:10:57 ◼   ► and design reasons and whatever, that deserves a market share lead in Android.

01:11:01 ◼   ► It just seems to me that on the merits, whatever market share lead they deserve is nowhere

01:11:07 ◼   ► near what they have, which is pretty much all of the profits in Android.

01:11:11 ◼   ► Yeah, they basically, Apple has most of the profits in the mobile market, and then Samsung

01:11:18 ◼   ► has the rest.

01:11:20 ◼   ► So what, your main phone is a Windows phone?

01:11:24 ◼   ► Yep.

01:11:25 ◼   ► All right.

01:11:26 ◼   ► So what do you think the problem is?

01:11:29 ◼   ► Why do you think it isn't more successful?

01:11:31 ◼   ► Well, so there's actually three phone markets in the world.

01:11:37 ◼   ► There's the United States, which is dominated by an oligopoly

01:11:45 ◼   ► of carriers and is driven by carrier subsidies

01:11:50 ◼   ► and weird agreements.

01:11:53 ◼   ► So there's actually a disincentive for people

01:11:55 ◼   ► to buy unlocked handsets.

01:11:59 ◼   ► They're expensive and you still have

01:12:00 ◼   ► to pay the exact same amount for the service anyway.

01:12:04 ◼   ► So there's the US market.

01:12:05 ◼   ► And then there's the developed market in the rest of the world

01:12:08 ◼   ► where most phones are unlocked and you have your choice,

01:12:12 ◼   ► but they're fairly expensive.

01:12:14 ◼   ► And then there's where the next billion phones

01:12:16 ◼   ► are going to come from in the emerging markets of India,

01:12:20 ◼   ► China, Africa, Brazil, all those places where there's

01:12:27 ◼   ► small dollars per device and razor thin margins,

01:12:31 ◼   ► but the volume is so huge that you can make

01:12:33 ◼   ► large amounts of money there.

01:12:35 ◼   ► So basically, in the US, all the market forces

01:12:39 ◼   ► have been distorted by the complete dominance

01:12:42 ◼   ► of the carriers, which Steve Jobs was able to actually break

01:12:47 ◼   ► that somehow with a thing that nobody else has ever

01:12:51 ◼   ► been able to duplicate.

01:12:53 ◼   ► And then, and so as a result, you have, you know,

01:12:58 ◼   ► Apple and Samsung basically have all the deals

01:13:02 ◼   ► with all the carriers here, and that's the US.

01:13:05 ◼   ► Then you get to Europe, where Windows Phone

01:13:08 ◼   ► has actually been fairly successful in the UK,

01:13:12 ◼   ► it's I think over 10%.

01:13:16 ◼   ► - Italy? - In Italy, it's dominant.

01:13:21 ◼   ► in Romania, I think, several of the Eastern European countries.

01:13:25 ◼   ► So there's pockets there where the phones,

01:13:29 ◼   ► they sell for significantly less than an Apple product,

01:13:34 ◼   ► of course.

01:13:35 ◼   ► And they're of better quality than an Android product.

01:13:39 ◼   ► And so the market says, OK.

01:13:40 ◼   ► And so they reward that there.

01:13:43 ◼   ► And then the real battlefield is going

01:13:45 ◼   ► to be in the emerging markets now, where--

01:13:49 ◼   ► And I think Apple is just going to say, fine,

01:13:51 ◼   ► we'll skim off the wealthy buyers in these markets.

01:13:56 ◼   ► They're the same ones who were coming to the US,

01:14:02 ◼   ► buying the products and then bringing them back home.

01:14:05 ◼   ► They'll finally be able to buy them directly there.

01:14:08 ◼   ► And then you'll have this basically a battle royal

01:14:11 ◼   ► between manufacturers who are building phones

01:14:16 ◼   ► based on Android and those who are building phones

01:14:19 ◼   ► based on the Windows operating system,

01:14:21 ◼   ► and now that it's free, the competitive landscape

01:14:24 ◼   ► for them will change significantly.

01:14:26 ◼   ► - So are you optimistic about Windows Phone?

01:14:31 ◼   ► - Well, optimistic is one of those odd words, isn't it?

01:14:34 ◼   ► I don't think it's, you know,

01:14:36 ◼   ► I think they're going to get

01:14:38 ◼   ► to double-digit market share worldwide.

01:14:41 ◼   ► - But that is, you think it's gonna be

01:14:42 ◼   ► disproportionate around the world.

01:14:44 ◼   ► - It's going to be disproportionate around the world, yeah.

01:14:47 ◼   ► I think it's going to be, you know,

01:14:49 ◼   ► Microsoft, Steve Ballmer used to say,

01:14:53 ◼   ► you know, the one thing about Microsoft

01:14:54 ◼   ► is we keep coming and coming and coming.

01:14:56 ◼   ► We just keep hammering at you.

01:14:58 ◼   ► We won't, you know, we don't quit.

01:15:01 ◼   ► We don't give up.

01:15:02 ◼   ► And so, you know, there's a lot of people out there saying,

01:15:04 ◼   ► you know, Microsoft just fold its tent on this phone thing

01:15:07 ◼   ► 'cause they're, you know, they went from 2 1/2% to 4%

01:15:10 ◼   ► and it took like two years, you know,

01:15:12 ◼   ► and if you grind out the market share like that,

01:15:16 ◼   ► You're never going to get back your investment in the thing.

01:15:21 ◼   ► Well, I don't know, Xbox maybe proves otherwise.

01:15:24 ◼   ► Xbox lost money, big money for seven years,

01:15:30 ◼   ► and now it's a successful device,

01:15:34 ◼   ► it's profitable on its own,

01:15:36 ◼   ► and it has an ecosystem around it,

01:15:37 ◼   ► and it has the same halo effect

01:15:40 ◼   ► that Apple's always counted on

01:15:43 ◼   ► for people to buy an iPod and then an iPhone

01:15:47 ◼   ► and then maybe a Mac and become a whole member of the family.

01:15:51 ◼   ► The Xbox has played that role there.

01:15:53 ◼   ► So I don't think that Microsoft is going to give up

01:15:56 ◼   ► on the Windows phone, but I think there's just really

01:16:00 ◼   ► a lot of institutional barriers to them getting

01:16:05 ◼   ► significant market share quickly.

01:16:08 ◼   ► - And it is a weird to me, like,

01:16:11 ◼   ► historical tables have turned, where to me Windows Phone

01:16:16 ◼   ► is the classic Mac OS from the late 90s,

01:16:20 ◼   ► where there's people who really love it for the design,

01:16:24 ◼   ► and that they can speak very eloquently,

01:16:26 ◼   ► like I really just like the way it works,

01:16:28 ◼   ► it clicks in my brain, which is how I felt

01:16:31 ◼   ► as a Mac user all that time, and yet you're like

01:16:34 ◼   ► the third or fourth platform that Developer X hits

01:16:38 ◼   ► when they're shipping an app,

01:16:40 ◼   ► - And that sucks, right?

01:16:41 ◼   ► - Yeah, so if you wanna call an Uber in San Francisco,

01:16:46 ◼   ► you're not gonna do it on your Windows phone.

01:16:48 ◼   ► - Oh, I didn't even know that.

01:16:49 ◼   ► So they don't even have an Uber?

01:16:50 ◼   ► - No, I think you have to go to the mobile site, m.uber.com.

01:16:55 ◼   ► They would have made a lot of money this week, I think.

01:17:02 ◼   ► - Welcome to being a Mac user in 1998.

01:17:04 ◼   ► - Exactly, I'm feeling whatever the opposite

01:17:09 ◼   ► - I'm not sure if Schadenfreude is.

01:17:11 ◼   ► - But I sympathize, and I do.

01:17:13 ◼   ► I think it's, you know, I even saw on some of the demo units

01:17:16 ◼   ► I had in the press room, there's a beta of Instagram,

01:17:20 ◼   ► and it's smooth.

01:17:21 ◼   ► I mean, that's one thing Microsoft has always done well,

01:17:23 ◼   ► is make things run fast.

01:17:25 ◼   ► And they're totally hitting that 60 frames per second,

01:17:29 ◼   ► really nice animation.

01:17:32 ◼   ► - No lag.

01:17:33 ◼   ► - No lag, and like you stop, and it stops.

01:17:36 ◼   ► it just has that iPhone quality scrolling

01:17:40 ◼   ► and stuff like that, which I have never seen

01:17:42 ◼   ► on an Android device.

01:17:43 ◼   ► - Yeah, so one of the interesting things,

01:17:45 ◼   ► I was looking at some numbers

01:17:47 ◼   ► when I was on the plane coming up here,

01:17:50 ◼   ► the most recent Gartner projections.

01:17:53 ◼   ► And so if you take, so they did phones, tablets,

01:17:59 ◼   ► PCs, and hybrid devices, okay?

01:18:02 ◼   ► So if you take phones out of there,

01:18:05 ◼   ► That's a billion and it weirdly distorts the market because in some of those emerging markets,

01:18:12 ◼   ► the only device that people will have will be a cheap smartphone.

01:18:16 ◼   ► Take that out of there.

01:18:18 ◼   ► And you actually, so you think the PC is dying, but what's actually happening is that you

01:18:25 ◼   ► combine tablets and conventional desktop and notebook PCs and these new hybrid things which

01:18:31 ◼   ► which are, you know, it's a tablet,

01:18:34 ◼   ► and then you hook a keyboard onto it,

01:18:35 ◼   ► and it's a laptop, and then you disconnect it,

01:18:37 ◼   ► and it's a tablet again.

01:18:40 ◼   ► And if you combine those three things,

01:18:42 ◼   ► you get, between 2013 and 2015,

01:18:45 ◼   ► you get a market that's growing at about 3 to 5% a year,

01:18:49 ◼   ► which is not unhealthy.

01:18:51 ◼   ► We've gotten used to things growing at hyper speed,

01:18:55 ◼   ► but that's not an unhealthy growth rate.

01:18:57 ◼   ► But what's interesting is that the boring PC segment is the one that's shrinking.

01:19:03 ◼   ► The tablet segment is growing, but much more modestly than it did after the iPad's initial

01:19:12 ◼   ► success.

01:19:13 ◼   ► And the category that seems to be growing fastest, that Gartner at least says will grow

01:19:19 ◼   ► fastest in that time, is this category of hybrids.

01:19:24 ◼   ► touch-based devices that like the Surface,

01:19:27 ◼   ► but also like the HP Envy or Asus Transformer T100

01:19:32 ◼   ► in these things.

01:19:33 ◼   ► And that to me, so 21 million of those sold in 2013,

01:19:37 ◼   ► 60 plus million of those will be sold next year.

01:19:43 ◼   ► - The story I've heard, and it's one of those things

01:19:46 ◼   ► where it's all, you can make up the story,

01:19:48 ◼   ► you can't prove it, but the story I've heard on that is,

01:19:52 ◼   ► Why are tablet sales seemingly not as fast as like iPhone and iPhone-like smartphones?

01:19:59 ◼   ► Why is the sales graph different?

01:20:02 ◼   ► And I think the gist of it that I've heard, and I believe it, it rings true, is it's two

01:20:06 ◼   ► things.

01:20:07 ◼   ► One, the phone market is so distorted by the contracts.

01:20:12 ◼   ► You know, you buy it for two years and it's at a ridiculously low price, and then when

01:20:15 ◼   ► your contract's up, they're like, "Come on in with $199 and get a brand new..."

01:20:20 ◼   ► - Or 99 or zero.

01:20:22 ◼   ► - And why not?

01:20:24 ◼   ► And you tend to abuse your phone more.

01:20:26 ◼   ► It's the smallest, it's the most likely to get dropped.

01:20:30 ◼   ► It does get dinged up, and you might,

01:20:32 ◼   ► a lot of people, even if they take reasonable care of it,

01:20:34 ◼   ► might actually need a new one.

01:20:35 ◼   ► - Or the battery might have died.

01:20:37 ◼   ► Or it might be, it won't hold as much of a charge.

01:20:39 ◼   ► - Whereas with tablets, people treat them

01:20:41 ◼   ► like they treat PCs, which is more or less

01:20:43 ◼   ► that they buy one and use it until it breaks.

01:20:45 ◼   ► - Right, the replacement cycle, if they're like PCs,

01:20:48 ◼   ► people are going to think of them as a five year purchase

01:20:52 ◼   ► and the iPad hasn't even,

01:20:54 ◼   ► the original iPads aren't even five years old yet.

01:21:00 ◼   ► In fact, they might not even be four years old yet.

01:21:03 ◼   ► - Four years, so it was 2010.

01:21:05 ◼   ► Or was it 11?

01:21:06 ◼   ► - No, it was 2010.

01:21:07 ◼   ► - But my parents still have an original one

01:21:09 ◼   ► and I'm like, "You should get a new one."

01:21:11 ◼   ► They're like, "No, it's brand new."

01:21:13 ◼   ► - It works.

01:21:14 ◼   ► Yeah, and a thrifty person.

01:21:17 ◼   ► - It's the last thing I wanted to talk about is,

01:21:20 ◼   ► I noticed yesterday when I saw you in the press room

01:21:22 ◼   ► that you were working on one of these devices.

01:21:25 ◼   ► - Actually two of them.

01:21:27 ◼   ► - Right, you were, you were upgrading one.

01:21:29 ◼   ► And I thought that was interesting,

01:21:33 ◼   ► that you don't just cover Microsoft,

01:21:35 ◼   ► and I'm, knowing you from reading your work,

01:21:37 ◼   ► I don't think you're using one just because

01:21:39 ◼   ► that's what Microsoft, it seems like you are a proponent

01:21:42 ◼   ► of the Surface tablets.

01:21:45 ◼   ► - Well-- - Or do you like it?

01:21:46 ◼   ► I-- it's an interesting device.

01:21:49 ◼   ► Part of my decision--

01:21:51 ◼   ► it's funny you ask that, because when I came out here--

01:21:54 ◼   ► remember Mission Impossible?

01:21:56 ◼   ► Remember the series?

01:21:57 ◼   ► So at the beginning of Mission Impossible, the series,

01:22:00 ◼   ► he--

01:22:00 ◼   ► Peter Graves would-- he'd open this manila folder filled

01:22:07 ◼   ► with pictures, and he'd bring them out.

01:22:10 ◼   ► And of course, it was always the same ones that he chose,

01:22:12 ◼   ► but he'd set the ones that he chose aside.

01:22:14 ◼   ► So when I was on my way here, I had this big lab bench

01:22:20 ◼   ► in my office.

01:22:20 ◼   ► And I had about eight devices on there to choose from.

01:22:24 ◼   ► And I thought, oh, shit, which ones am I going to bring with me?

01:22:27 ◼   ► Because I have-- there were like four 8-inch tablets,

01:22:31 ◼   ► and a couple of notebooks, and a couple of Surface family

01:22:35 ◼   ► devices, and then this Nokia tablet.

01:22:41 ◼   ► So I said, I'm only going to bring two.

01:22:44 ◼   ► and I want to see how they work.

01:22:47 ◼   ► And so the Surface is--

01:22:51 ◼   ► especially the Surface Pro 2 is a classic example,

01:22:56 ◼   ► classic Microsoft thing.

01:22:58 ◼   ► They get it right on the third iteration.

01:23:01 ◼   ► This is the second iteration.

01:23:02 ◼   ► And it's so much better than the original, but it's still--

01:23:07 ◼   ► there's a few things they can do.

01:23:10 ◼   ► And so I think there's going to be a new rendition of it

01:23:13 ◼   ► this year.

01:23:14 ◼   ► and that will be one where you go,

01:23:16 ◼   ► wow, they finally figured everything out

01:23:18 ◼   ► and they fixed it.

01:23:19 ◼   ► I had an iPad there too and I was sorely tempted

01:23:23 ◼   ► to bring the iPad and try and do things

01:23:25 ◼   ► in Office for the iPad.

01:23:27 ◼   ► But it didn't, it wound up in the coal pile.

01:23:32 ◼   ► - And do you think part of it too

01:23:34 ◼   ► is more than just hardware though,

01:23:35 ◼   ► it ties in with Windows 8.1,

01:23:38 ◼   ► which a key feature of is a renewed focus

01:23:43 ◼   ► on keyboard and mouse, and by mouse I mean trackpad,

01:23:47 ◼   ► anything that moves a cursor around.

01:23:48 ◼   ► - Trackpad, mouse, yeah, whatever.

01:23:50 ◼   ► It really deals with that what were they thinking

01:23:55 ◼   ► kind of objection to the original one,

01:23:57 ◼   ► where they just tried to hide all signs of the desktop,

01:24:00 ◼   ► even though it was there and greatly improved.

01:24:05 ◼   ► Yeah, so the Surface Pro 2, basically I've been using it

01:24:08 ◼   ► almost exclusively as if it were a laptop.

01:24:13 ◼   ► But it is kind of nice when I'm on the plane,

01:24:17 ◼   ► I can just detach the keyboard from it and set it down

01:24:19 ◼   ► and watch a movie on it.

01:24:22 ◼   ► I think the goal of those hybrid devices,

01:24:25 ◼   ► the theoretical goal is that instead of having to carry

01:24:29 ◼   ► a MacBook and an iPad, you can just carry one

01:24:33 ◼   ► and it becomes, it changes personality to suit

01:24:38 ◼   ► the task that you have.

01:24:40 ◼   ► - I'm laughing because that's what the trip is.

01:24:42 ◼   ► - Of course.

01:24:43 ◼   ► - MacBook Air.

01:24:44 ◼   ► - Yeah, and so the idea is that if you had an iPad

01:24:48 ◼   ► that could magically run OS X and had a keyboard

01:24:55 ◼   ► attached to it, then you take it off and it's running iOS.

01:25:00 ◼   ► - So what did you have in the keynote

01:25:02 ◼   ► when you were in the keynote hall?

01:25:05 ◼   ► Were you using a laptop or were you--

01:25:07 ◼   ► - I was using the Surface primarily because it has,

01:25:11 ◼   ► One of the things they fixed in version two that made it better than version one is this

01:25:14 ◼   ► thing called the type cover.

01:25:16 ◼   ► The thing that clicks in and it has an illuminated keyboard.

01:25:20 ◼   ► And it's usable on a lap?

01:25:22 ◼   ► Because that's why I ask.

01:25:24 ◼   ► Well, first of all, the press, they gave us tables.

01:25:28 ◼   ► Oh, they never give us tables.

01:25:30 ◼   ► They gave us tables and wired Ethernet connections and I think there was like free beer and everything.

01:25:41 ◼   ► But no, but I have been using that on,

01:25:45 ◼   ► with the type cover, it actually does work on your lap

01:25:48 ◼   ► as a laptop.

01:25:49 ◼   ► With the first version, the first edition,

01:25:52 ◼   ► which only had one stop for the little hinge

01:25:54 ◼   ► that comes out from the back there,

01:25:57 ◼   ► you sort of had to play statue.

01:26:00 ◼   ► If you sit just right and you don't move,

01:26:05 ◼   ► you could actually type on this thing,

01:26:06 ◼   ► but it was, it flexed and it wasn't a company,

01:26:10 ◼   ► and it wasn't a comfortable experience, this is more so.

01:26:13 ◼   ► It actually feels a lot like a laptop.

01:26:16 ◼   ► But if I'm at home, I will either have a tablet,

01:26:20 ◼   ► which could be a Windows tablet or an iPad,

01:26:24 ◼   ► if I'm sitting on the couch, or a notebook.

01:26:27 ◼   ► I won't use the Surface in that mode.

01:26:32 ◼   ► - I haven't heard a word you've said

01:26:33 ◼   ► in the last three minutes, 'cause all I can keep thinking

01:26:34 ◼   ► about is how nice it would be to have a table.

01:26:37 ◼   ► (audience laughing)

01:26:40 ◼   ► (laughing)

01:26:42 ◼   ► you