The Talk Show

00:00:00 ◼   ► René, welcome back to the talk show.

00:00:03 ◼   ► Thanks, always a pleasure.

00:00:05 ◼   ► Oh man, how's your summer going?

00:00:11 ◼   ► Good, good. I mean, summer is supposed to be where things are slower, but it's been super hectic.

00:00:17 ◼   ► Work-wise, you're saying?

00:00:19 ◼   ► Work-wise, family-wise, you know, this business when people come over to visit, you know, you still have to work, so it's always odd.

00:00:26 ◼   ► Right, I totally know what you're talking about.

00:00:30 ◼   ► How's the weather up there?

00:00:34 ◼   ► It's muggy, so Canada, I don't know if Guy English ever explained

00:00:38 ◼   ► this to people, but it goes from like minus 40, which I guess is like minus 30

00:00:42 ◼   ► Fahrenheit, to plus 40, which is like 100 degrees over the course of a couple weeks,

00:00:46 ◼   ► and it's 100% humidity because Montreal is an island, so we just don't get

00:00:50 ◼   ► nice weather. I don't think you do.

00:00:54 ◼   ► - I don't, I've only been to Montreal during Singleton

00:00:57 ◼   ► and one time long, long, long, long before that,

00:01:00 ◼   ► but I don't remember when it was.

00:01:01 ◼   ► But I could tell that even in the winter,

00:01:04 ◼   ► you can kind of tell it's high humidity.

00:01:07 ◼   ► - The equinoxes are nice, that's about it.

00:01:09 ◼   ► - Yeah.

00:01:10 ◼   ► Pretty hot here in Philadelphia as well.

00:01:13 ◼   ► I don't even know where to start.

00:01:17 ◼   ► There's a lot going on.

00:01:18 ◼   ► Don't you think?

00:01:20 ◼   ► - Yes, it's a sillier season than usual.

00:01:22 ◼   ► - Yeah.

00:01:23 ◼   ► Did you see the article?

00:01:25 ◼   ► I didn't even want to link to it.

00:01:27 ◼   ► Did you see the stupid fucking article

00:01:28 ◼   ► in the Wall Street Journal over the weekend?

00:01:31 ◼   ► I know Trip Merkle or whatever the hell his name is,

00:01:34 ◼   ► byline was on it, and somebody else,

00:01:36 ◼   ► about how Samsung is like the true design company

00:01:39 ◼   ► that's built its company for decades around design first.

00:01:44 ◼   ► - It felt like a sponsored post from Samsung Mobile

00:01:46 ◼   ► that was rebranded with an Apple headline

00:01:48 ◼   ► so people would click on it.

00:01:50 ◼   ► - It was a really, really strange article.

00:01:51 ◼   ► It was just it was just like it was like a profile piece about Samsung but shoehorned into and

00:01:55 ◼   ► Apple's losing a clickbait title and it was it didn't fit anything right and and I it's like it wasn't worth I

00:02:02 ◼   ► Decided not to even link to it to shoot it down because it was it's just anybody who would go for it. It's just so

00:02:08 ◼   ► You know, it's like is the galaxy s8 a good-looking phone. Yes, is it ahead of Apple on the side-to-side?

00:02:16 ◼   ► Bezels and you know, very small chin forehead. Yes

00:02:20 ◼   ► And you know, there's no argument about that.

00:02:25 ◼   ► And that sort of leads into what we're actually talking about

00:02:27 ◼   ► that's substantive about what might be coming up

00:02:30 ◼   ► with the iPhone and stuff.

00:02:31 ◼   ► - But that's true to an extent.

00:02:33 ◼   ► But you look at their, even their recent history,

00:02:35 ◼   ► the pen and the Galaxy S6, I guess 'cause they skipped

00:02:37 ◼   ► the 7, got stuck if you put it in backwards,

00:02:40 ◼   ► which is not good design.

00:02:41 ◼   ► The Galaxy Note 8 or 7, sorry, famously blew up,

00:02:44 ◼   ► which is really, really, really bad design.

00:02:47 ◼   ► They've had screens come off.

00:02:48 ◼   ► They've had, people were making fun of one of their phones

00:02:51 ◼   ► 'cause you could stick cards in it

00:02:52 ◼   ► because the gap became so big in the side of the screen.

00:02:55 ◼   ► These are all design issues.

00:02:57 ◼   ► It's just not how a phone looks.

00:02:59 ◼   ► - And even with the S8, there are tons of complaints

00:03:04 ◼   ► about the Bixby button and that it's,

00:03:07 ◼   ► people are, there's a dedicated button

00:03:10 ◼   ► to bring up their version of voice-driven AI thing

00:03:12 ◼   ► called Bixby, dedicated button on the hardware,

00:03:16 ◼   ► which in and of itself is a questionable design.

00:03:19 ◼   ► Questionable, maybe it's good, I don't think so,

00:03:21 ◼   ► but it's absolutely the fact that it seems

00:03:25 ◼   ► to get triggered accidentally a lot

00:03:27 ◼   ► when you're trying to hit other buttons

00:03:28 ◼   ► is probably a design issue.

00:03:30 ◼   ► The fingerprint sensor of this thing is on the back

00:03:34 ◼   ► because they couldn't put it on the front,

00:03:36 ◼   ► which is definitely, in my opinion,

00:03:40 ◼   ► I have a Google Pixel and it has a great fingerprint sensor

00:03:42 ◼   ► that seems to work about as fast as an iPhone's.

00:03:46 ◼   ► having it on the back is worse than having it on the front.

00:03:48 ◼   ► There's no question in my mind.

00:03:49 ◼   ► Is it horrible?

00:03:50 ◼   ► No, I mean, but it's worse.

00:03:53 ◼   ► That's the-- - So Samsung's even worse

00:03:54 ◼   ► because they put it next to the camera lens,

00:03:56 ◼   ► so half the time you swipe the camera lens,

00:03:57 ◼   ► and then they have to have software

00:03:59 ◼   ► to tell you your camera lens is all grossed up

00:04:01 ◼   ► and you need to clean it.

00:04:02 ◼   ► - Right, and yeah, and I think it's actually,

00:04:04 ◼   ► while trying to feel you, and it's not even centered,

00:04:07 ◼   ► it's like off-center, which is bad design.

00:04:10 ◼   ► And famously, you have a year's worth of documentation

00:04:15 ◼   ► when you look at the side at the bottom where all the ports are and the screws and stuff,

00:04:22 ◼   ► noticing how nothing on a Samsung phone is actually center aligned with each other, which

00:04:26 ◼   ► is design and which would bother me greatly.

00:04:29 ◼   ► And yes, the fact that the speaker grills aren't aligned with the USB slot on a Samsung

00:04:35 ◼   ► phone, is that the sort of thing that of the tens of millions of people who buy one that

00:04:40 ◼   ► most of them aren't going to notice?

00:04:42 ◼   ► Yes.

00:04:43 ◼   ► But, boy, I sure notice it.

00:04:46 ◼   ► - And it's something Apple builds for.

00:04:47 ◼   ► Like, they specifically build everything from the board

00:04:49 ◼   ► on up so that those things do align.

00:04:51 ◼   ► Just a question of taking the time to do it.

00:04:55 ◼   ► I'm sure it's more difficult,

00:04:56 ◼   ► but it's something that they could easily do.

00:04:58 ◼   ► - Anyway, of course it doesn't get into any of that stuff.

00:05:06 ◼   ► - No, it was, again, it was marketed as news,

00:05:09 ◼   ► which was a bad decision.

00:05:11 ◼   ► Neil Seibert had it really good.

00:05:13 ◼   ► People don't describe to his newsletter,

00:05:14 ◼   ► he does a really good job of analyzing the Apple market.

00:05:17 ◼   ► He used to be a financial analyst,

00:05:19 ◼   ► and I think he was a sell-side analyst,

00:05:21 ◼   ► but he does a really good job of delving

00:05:22 ◼   ► into Apple's decisions from sort of

00:05:24 ◼   ► the business point of view.

00:05:25 ◼   ► And he was saying just how odd recent Bloomberg

00:05:27 ◼   ► and Wall Street Journal pieces have been

00:05:29 ◼   ► because they have been marketing opinion as news,

00:05:32 ◼   ► and he thinks it's what you've been talking about,

00:05:34 ◼   ► which is it's getting harder and harder

00:05:36 ◼   ► for them to score rumors.

00:05:37 ◼   ► So absent rumors, they'll do anything they can

00:05:39 ◼   ► to get the same sort of clicks out of people.

00:05:40 ◼   ► - Yeah, I actually am a subscriber to Above Avalon.

00:05:44 ◼   ► That's Neil Seibart's newsletter.

00:05:45 ◼   ► And I read that today and it actually,

00:05:48 ◼   ► the fact that he eviscerated it.

00:05:49 ◼   ► So it's a shame, and I don't blame,

00:05:52 ◼   ► it's a good business model and Ben Thompson does it

00:05:55 ◼   ► and others, to have these subscriber-only newsletters

00:05:59 ◼   ► with a once a week free post that's everywhere.

00:06:01 ◼   ► And it's frustrating for me because if Neil's newsletter

00:06:04 ◼   ► today had been public, I definitely would have linked to it

00:06:06 ◼   ► rather than, I don't wanna write it up myself, but yeah.

00:06:10 ◼   ► And his main point, and it's a good one,

00:06:12 ◼   ► and it's kind of inside baseball for journalism.

00:06:16 ◼   ► But like, Daring Fireball is very easily categorized.

00:06:21 ◼   ► The entire thing is sort of my opinion column.

00:06:24 ◼   ► And everybody knows that I'm writing from my perspective,

00:06:28 ◼   ► and I'd make clear by how I phrase my sentences

00:06:31 ◼   ► what I'm stating as a fact that I know,

00:06:34 ◼   ► or that is just simply what happens

00:06:36 ◼   ► when you click this button as a fact,

00:06:38 ◼   ► and what's my opinion.

00:06:39 ◼   ► And so I can mix them interchangeably

00:06:43 ◼   ► and you know what you're getting if you're a regular reader.

00:06:46 ◼   ► In a newspaper, especially a traditional one

00:06:48 ◼   ► like the Wall Street Journal or the New York Times,

00:06:50 ◼   ► there's a separation between the opinion sections

00:06:52 ◼   ► and the news sections.

00:06:56 ◼   ► And so somebody like, say, Walt Mossberg,

00:06:59 ◼   ► wrote, they may not call,

00:07:03 ◼   ► it's not like he wrote on the op-ed page,

00:07:04 ◼   ► but his personal technology column,

00:07:06 ◼   ► you know, like where Joanna Stern is now,

00:07:08 ◼   ► is a subjective column where it's here's this columnist's view on whether this technology

00:07:16 ◼   ► is good or bad or whatever. The piece about Apple and Samsung design ran in the news section.

00:07:22 ◼   ► Again, you can have profiles that run there, but it's really hard to justify a lot, most

00:07:28 ◼   ► big chunks of that article based on it as a news article because it really wasn't.

00:07:35 ◼   ► news of it. And the way that the cheat is the quotes that he said, I guess it was two

00:07:42 ◼   ► people, Tripp, whatever his name is, but the quotes that they picked from quote unquote

00:07:47 ◼   ► analysts and quote former Apple executives and stuff like that. That's the cheat that

00:07:53 ◼   ► a news article can use to kind of come across as an opinion column. So the byline article

00:07:57 ◼   ► writers aren't giving their opinion, but they're quoting these people who are saying

00:08:02 ◼   ► these things that are clearly opinion.

00:08:04 ◼   ► getting quotes from Samsung mobile about the state of Apple design is not something that a legitimate

00:08:09 ◼   ► news article would do. Right. And it's the part about Neil Seibard's article that really made me

00:08:16 ◼   ► like, yes, this is exactly what I suspected, but he did the work and went to do it. Here, let me

00:08:22 ◼   ► actually just bring it up because I don't want to get it wrong. But there was a quote from somebody

00:08:27 ◼   ► who was attributed as a, said Hugh Dubberly, a former Apple Creative Director and former

00:08:36 ◼   ► member of Samsung's Global Design Advisory Board.

00:08:39 ◼   ► The pipeline that Steve Jobs started is over.

00:08:42 ◼   ► This is a guy who's saying, here's his full quote.

00:08:44 ◼   ► This is a quote from the guy.

00:08:45 ◼   ► It's not so much that Samsung has gotten better, but Apple has fundamentally changed, said

00:08:49 ◼   ► Hugh Dubberly, a former Apple Creative Director and former member of Samsung's Design Advisory

00:08:54 ◼   ► Board.

00:08:55 ◼   ► The pipeline that Steve Jobs started is over.

00:08:57 ◼   ► That pretty much summarizes the gist of the article, which is positing that Samsung, from

00:09:04 ◼   ► its outset, has been a design-first company, and that Apple is the shell of its former

00:09:13 ◼   ► self.

00:09:14 ◼   ► It's a stream of opinion that's actually been thankfully fading away recently, which

00:09:19 ◼   ► is that Apple is doomed without Steve Jobs.

00:09:23 ◼   ► But here's a guy going back to it.

00:09:26 ◼   ► Now, it's an interesting pedigree,

00:09:28 ◼   ► because I'm personally not aware of very many people.

00:09:31 ◼   ► In fact, I can't think of anybody off the top of my head

00:09:33 ◼   ► who's worked at Apple and Samsung in any,

00:09:37 ◼   ► I can't think of any former Apple people

00:09:39 ◼   ► who've also worked at Samsung,

00:09:41 ◼   ► so that's certainly interesting.

00:09:42 ◼   ► - But there was a guy who worked at Apple in UI

00:09:47 ◼   ► and then went to work at Blackberry in UI,

00:09:48 ◼   ► and it's very similar sort of things,

00:09:50 ◼   ► is they wanna claim the crown,

00:09:51 ◼   ► and that's sort of what this does.

00:09:53 ◼   ► And they're also from periods,

00:09:55 ◼   ► I forget when this guy was there, but it was way before any of the modern things that Apple

00:09:59 ◼   ► has done before iPhone, before all of these things.

00:10:01 ◼   ► Well, here's the biggest—

00:10:02 ◼   ► And it's like—

00:10:03 ◼   ► Here's where Seibart does the work. The authors quote Hugh Dubberley, a former Apple

00:10:06 ◼   ► creative director, and these are Seibart's words, "Whenever I see former Apple executive,

00:10:11 ◼   ► I raise an eyebrow or two. There seems to be a high correlation between former Apple

00:10:15 ◼   ► executive or some kind of negative view as to how Apple is currently operating. Weird,

00:10:19 ◼   ► huh?" Upon closer examination, Dubberley worked at Apple during the late 1980s and

00:10:25 ◼   ► early 1990s. That means he joined Apple after Steve left to start next, and he was long

00:10:30 ◼   ► gone before Steve returned to Apple in 1996.

00:10:34 ◼   ► So, it's just sort of what you expect the editor of the Wall Street Journal to do.

00:10:39 ◼   ► Right. It's, it's, that's really, it's downright misleading, in my opinion. It's,

00:10:45 ◼   ► it's, it's exactly the sort of thing that I expect better from, from the Wall Street

00:10:48 ◼   ► Journal, where, technically speaking, it is, it is technically accurate to describe him

00:10:54 ◼   ► as a quote "former Apple executive." Right? That's not incorrect. But as a casual reader

00:11:01 ◼   ► of the Wall Street Journal, it leaves you with an incredibly false perception. The perception

00:11:08 ◼   ► I would draw from that if I weren't skeptical because of my familiarity with the company

00:11:14 ◼   ► and the lack of interchange between employees, especially at an executive level between Apple

00:11:21 ◼   ► Samsung. You and I can be very skeptical of that. Probably most people who are listening to this

00:11:26 ◼   ► podcast are at least halfway skeptical. But think about the Wall Street Journal is a super mass

00:11:30 ◼   ► market. It's one of the most read websites and newspapers in America, if not the world.

00:11:34 ◼   ► Somebody who's just sort of casually familiar with this, I would think would naturally assume

00:11:40 ◼   ► that this guy was relevantly employed at both companies, right? I mean, absolutely.

00:11:49 ◼   ► I don't think most people from the Wall Street Journal or reading the Wall Street Journal

00:11:54 ◼   ► could name a single product Apple made between the late 80s and early 90s. I don't think they

00:12:02 ◼   ► could name a single product. I don't even know if they could name just the Mac, just quote unquote

00:12:07 ◼   ► the Mac. Maybe. And this, you know, called it a hit piece and that's, you know, it reels like that.

00:12:13 ◼   ► And I remember previously these things sort of go in phases. There was a whole bunch of anti-Apple

00:12:17 ◼   ► Pay articles, and I don't believe it was a Wall Street Journal, but it was a similar paper of

00:12:20 ◼   ► record, did a story about how terrible, how people, they didn't think that Apple Pay would get any

00:12:24 ◼   ► adoption. And the person they quoted was, was said like, you know, mobile payment expert, blah, blah,

00:12:29 ◼   ► blah. And anyone who was in the industry knew that that was the guy who started the company that

00:12:33 ◼   ► Samsung bought to make Samsung Pay. And it wasn't identified at all in the article. So someone

00:12:37 ◼   ► casually reading it would think that an expert had said that this will have never get any traction.

00:12:41 ◼   ► Pete: Well, it's just inaccurate. They're just looking for hits. And I think, I think the basic

00:12:45 ◼   ► I suggest I've written about this

00:12:46 ◼   ► and Sybarth touched upon it.

00:12:48 ◼   ► The fact that they know they want to write about Apple

00:12:50 ◼   ► and they want to write about this upcoming phone

00:12:52 ◼   ► and they know, 'cause it gets clicks, it gets headlines,

00:12:56 ◼   ► and people are interested in it.

00:12:57 ◼   ► And it is a super successful product.

00:13:00 ◼   ► Financially, it makes sense

00:13:02 ◼   ► that they would have articles about it.

00:13:04 ◼   ► And the truth is, most people, everybody,

00:13:06 ◼   ► the collectively, we seem to know almost nothing

00:13:09 ◼   ► about what's coming up with the new iPhones.

00:13:11 ◼   ► Like here's where this article

00:13:13 ◼   ► that I didn't really want to write about,

00:13:14 ◼   ► which is exactly what I like having a podcast to talk about,

00:13:17 ◼   ► leads into something that really is worth talking about.

00:13:20 ◼   ► - Absolutely.

00:13:20 ◼   ► - I'm gonna take a break here and thank our first sponsor

00:13:24 ◼   ► before we get into talking about new iPhones.

00:13:29 ◼   ► And our first sponsor I'm very excited about,

00:13:31 ◼   ► it's our good friend at Casper.

00:13:34 ◼   ► Casper makes an obsessively engineered mattress

00:13:38 ◼   ► at a shockingly fair price.

00:13:40 ◼   ► Go to casper.com/thetalkshow and use code thetalkshow

00:13:44 ◼   ► and you will save 50 bucks towards any mattress.

00:13:49 ◼   ► Put a little asterisk right there.

00:13:50 ◼   ► I'll get back to that.

00:13:51 ◼   ► Now Casper created one perfect mattress.

00:13:53 ◼   ► This is one of my very favorite things about the company.

00:13:56 ◼   ► And they sell it directly to consumers.

00:13:58 ◼   ► So when you go to Casper, you don't have to pick

00:13:59 ◼   ► like medium firm or extra firm,

00:14:04 ◼   ► or you want coil springs, or do you want memory foam,

00:14:07 ◼   ► or do you want, how do you know?

00:14:09 ◼   ► Especially if you're ordering online.

00:14:11 ◼   ► You don't know.

00:14:13 ◼   ► No, they have mattress engineers, actual engineers,

00:14:16 ◼   ► who all they do is design mattresses,

00:14:17 ◼   ► and they develop one in-house type of mattress.

00:14:21 ◼   ► It has a sleek design, 'cause it's a foam type thing.

00:14:24 ◼   ► It's vacuum packed when it gets delivered to you,

00:14:26 ◼   ► and it comes in a remarkably small box.

00:14:28 ◼   ► I don't know if they still do this,

00:14:31 ◼   ► but at one point they were delivering,

00:14:32 ◼   ► like in Manhattan, if you ordered in New York,

00:14:35 ◼   ► they actually delivered them by bicycle courier.

00:14:37 ◼   ► That's how small, I mean, it's a pretty big box

00:14:40 ◼   ► for a guy riding a bicycle,

00:14:41 ◼   ► but it's actually small enough that a guy could,

00:14:44 ◼   ► somebody could put an entire mattress,

00:14:47 ◼   ► the way they compress it into a box, onto their back,

00:14:49 ◼   ► and deliver it to you on a bicycle.

00:14:52 ◼   ► It's really, really neat.

00:14:53 ◼   ► It's actually fun to open up and use.

00:14:55 ◼   ► We've got them here.

00:14:57 ◼   ► We use them in the Gruber household.

00:14:58 ◼   ► We've just been away on vacation,

00:15:00 ◼   ► and you know, hotel beds, we stay in nice places,

00:15:05 ◼   ► and they have nice beds.

00:15:06 ◼   ► My son, number one complaint by the end of the vacation

00:15:09 ◼   ► was that he wanted to go home

00:15:10 ◼   ► get back on his Casper mattress.

00:15:12 ◼   ► Just totally true, absolutely true.

00:15:14 ◼   ► He wanted to leave Disney World

00:15:15 ◼   ► and go back home to his regular mattress.

00:15:18 ◼   ► I don't know how much more of a,

00:15:21 ◼   ► I don't know how much more of a compliment I can pay

00:15:25 ◼   ► (laughs)

00:15:27 ◼   ► than that a 13-year-old wanted to,

00:15:29 ◼   ► was ready to go from Disney World

00:15:30 ◼   ► to get home to his Casper mattress.

00:15:32 ◼   ► Really, really great stuff.

00:15:33 ◼   ► And they're just great prices.

00:15:37 ◼   ► I know what you're saying.

00:15:38 ◼   ► I know if you've ever heard me do a Casper pitch before,

00:15:40 ◼   ► Here's the whole thing. How do you blue? It seems weird to buy a mattress. It seems weird without ever ever like trying it

00:15:45 ◼   ► Like just even just putting your hand on it squishing it

00:15:47 ◼   ► Number one, you don't want to go to a mattress store go into a mattress store of all the type of brick-and-mortar stores

00:15:53 ◼   ► They're suck mattress stores are way up near the top number two. They rip you off

00:15:58 ◼   ► But here's the solution Casper has a hundred night risk-free guarantee. So you buy it try it

00:16:04 ◼   ► However, skeptical maybe you're highly skeptical

00:16:07 ◼   ► Buy it try it you get a hundred nights

00:16:09 ◼   ► And if you don't like it, you just you just give them a ring get on a website tell them

00:16:13 ◼   ► I don't like it and they will come pick it up and give you all your money back and

00:16:17 ◼   ► Casper mattresses were designed developed and they are assembled right here in the USA

00:16:23 ◼   ► So anyway, you get 50 bucks towards any mattress go to casper.com slash the talk show use that code the talk show

00:16:28 ◼   ► You'll get the money off. The only hitch on that the asterisk I was telling you about before is that they also have dog mattresses

00:16:34 ◼   ► I've been selling these things

00:16:36 ◼   ► pitching these things on this sponsor of ever since they came out and and I have so many

00:16:40 ◼   ► Reader emails saying my god, my dog loves this mattress. My dog won't get up in the morning loves the mattress

00:16:46 ◼   ► You don't save 50 bucks on a dog mattress because the dog mattresses are cheaper. So they don't have a discount for it, but

00:16:52 ◼   ► The affection from your your pooch will will more than more than make up for the fact that you don't get the discount on that

00:16:59 ◼   ► So there you go. My thanks to Casper

00:17:01 ◼   ► Great company great mattress. I really I really love this product

00:17:05 ◼   ► So that leads us to what we do know about new iPhones number one

00:17:09 ◼   ► I think I do I think it's a fact and you and I follow this stuff pretty closely

00:17:12 ◼   ► I really do think that while we know some stuff about what seems to be we have some hunches about what's coming up with new iPhones

00:17:19 ◼   ► I think we know less than we have in just about any year in the past. I think that's true

00:17:23 ◼   ► I mean we all it's it's almost certain

00:17:26 ◼   ► There's no reality in which Apple just pieces out stops making iPhones and switches to making hot tubs

00:17:29 ◼   ► So I'm fairly certain there will be a new iPhone.

00:17:32 ◼   ► But there is just so much up in the air now, especially with--

00:17:37 ◼   ► I don't want to say the iPhone 5C was similar,

00:17:38 ◼   ► but that was the last time where there was, for me at least,

00:17:41 ◼   ► a curveball, where there was a consideration

00:17:43 ◼   ► that they were going to make, instead of just bringing

00:17:45 ◼   ► over the previous year's flagship

00:17:47 ◼   ► and dropping it $100, that they were

00:17:48 ◼   ► going to make something that was less expensive that might

00:17:51 ◼   ► better address mainstream markets or emerging markets.

00:17:54 ◼   ► And we sort of didn't know what that was going to be.

00:17:56 ◼   ► Some people thought it was going to be a cheap iPhone.

00:17:57 ◼   ► Some people thought it was going to be something else.

00:17:59 ◼   ► and it ended up being the 5C.

00:18:01 ◼   ► And this is similar, but at the opposite end of the spectrum

00:18:04 ◼   ► where the rumors suggest heavily

00:18:05 ◼   ► that they're gonna be looking at the higher markets this time.

00:18:08 ◼   ► - So the rumors we do know

00:18:10 ◼   ► are the ones that have been pretty consistent

00:18:12 ◼   ► for a while now.

00:18:13 ◼   ► I mean, number one, a long time ago,

00:18:15 ◼   ► and I hate to, I really do, I'm laughing here,

00:18:18 ◼   ► but I hate to brag, but I really do feel,

00:18:20 ◼   ► I really do think I was the first person to mention this

00:18:25 ◼   ► was about two years ago, maybe longer, I don't know.

00:18:28 ◼   ► But I heard from a reputable little birdie

00:18:33 ◼   ► that Apple was working on a couple years out from then

00:18:37 ◼   ► and an iPhone with an edge-to-edge display

00:18:41 ◼   ► that got rid of the bezels on the sides

00:18:43 ◼   ► and most of them on the top and bottom.

00:18:45 ◼   ► And that it's drop dead gorgeous.

00:18:46 ◼   ► And I didn't write about it 'cause I don't like

00:18:49 ◼   ► writing about stuff like that anymore,

00:18:50 ◼   ► but I talked about it on this show

00:18:51 ◼   ► and it got picked up, I think, by MacRumors.

00:18:56 ◼   ► So the idea that there's an iPhone coming

00:18:58 ◼   ► with smaller bezels, you don't even need to know anybody

00:19:02 ◼   ► or have any sources to see, you know,

00:19:04 ◼   ► you don't need a weatherman to know

00:19:05 ◼   ► which way the wind blows, right?

00:19:07 ◼   ► I mean, it's, you know, iPhone's, you know,

00:19:10 ◼   ► Apple products tend to get thinner, you know?

00:19:13 ◼   ► - Well, I think I wrote about the losing the home button,

00:19:15 ◼   ► I think, in January of 2015.

00:19:17 ◼   ► So this, at least, that should put aside the rumors

00:19:19 ◼   ► that this is a last minute thing

00:19:20 ◼   ► that they're struggling towards.

00:19:22 ◼   ► - Right.

00:19:22 ◼   ► I think here it was this 2017 iPhone may feature edge to edge display.

00:19:32 ◼   ► Yeah.

00:19:33 ◼   ► So this was, it wasn't two years ago, it was me, it was back in May 2016 when I talked about this on the talk show.

00:19:39 ◼   ► Here I will put this link in the show notes.

00:19:40 ◼   ► Actually I think what I heard about two years prior was the dual camera system.

00:19:45 ◼   ► That's right.

00:19:45 ◼   ► I get my, I get my little birdie stuff.

00:19:47 ◼   ► Well, you and I had a discussion, I forget when it was, but it was roughly two years

00:19:51 ◼   ► ago about the practicality of removing the home button because people were just so used

00:19:55 ◼   ► to it as an escape mechanism.

00:19:57 ◼   ► Right.

00:19:58 ◼   ► And I think our conclusion was that you just need some other way to have the escape mechanism.

00:20:04 ◼   ► It doesn't have to be an actual button.

00:20:06 ◼   ► There just needs to be some sort of affordance for that.

00:20:09 ◼   ► Yeah, it's the same as the touch ID/face ID thing.

00:20:11 ◼   ► Touch ID is an instance of doing something, and there are other ways of doing the same

00:20:16 ◼   ► thing.

00:20:17 ◼   ► - A great example would be mute switches, right?

00:20:21 ◼   ► And the iPhone still has one.

00:20:24 ◼   ► We could go off on a huge tangent on this

00:20:26 ◼   ► 'cause I've thought about it a lot.

00:20:27 ◼   ► Apple in general is a company that is generally,

00:20:33 ◼   ► I think everybody would agree whether you like them

00:20:35 ◼   ► or dislike them or are ambivalent towards them,

00:20:37 ◼   ► they tend to edge towards minimalism on buttons.

00:20:41 ◼   ► I mean, they've famously, infamously,

00:20:44 ◼   ► the smart keyboard gets rid of things like the escape key,

00:20:47 ◼   ► The buttons tend to go away.

00:20:49 ◼   ► Apple tends to be conservative on this.

00:20:51 ◼   ► And yet they're the only company that I know of

00:20:54 ◼   ► that makes a smartphone that has a dedicated mute switch.

00:20:58 ◼   ► So I think Apple obviously thinks the mute switch

00:21:00 ◼   ► is an important thing.

00:21:01 ◼   ► It's been there on every iPhone ever since.

00:21:03 ◼   ► But the iPads started with them,

00:21:06 ◼   ► and now a couple years ago,

00:21:07 ◼   ► I think probably more iPads have shipped

00:21:10 ◼   ► without mute switches than had them in the first place.

00:21:13 ◼   ► But there was--

00:21:14 ◼   ► - I think you and I talked about this at WDC,

00:21:15 ◼   ► where the next, like the rumors for the next,

00:21:17 ◼   ► maybe the next or next iPhone is no buttons and no ports.

00:21:21 ◼   ► And people thought that was ridiculous,

00:21:22 ◼   ► but now the Pixel 2 is rumored not to have any buttons,

00:21:25 ◼   ► and there's rumors of phones with no ports.

00:21:28 ◼   ► So the future keeps going.

00:21:29 ◼   ► - Right, no headphone port, that's sort of like getting,

00:21:32 ◼   ► you know, getting rid of anything hardware.

00:21:34 ◼   ► You know, just reducing the thing ultimately to--

00:21:37 ◼   ► - Things that can fail on the device.

00:21:38 ◼   ► - Right, things that can fail, things that have moving parts.

00:21:42 ◼   ► Moving parts tend to go away,

00:21:44 ◼   ► and moving parts tend to have problems.

00:21:46 ◼   ► I have mixed feelings about the missing mute switch

00:21:50 ◼   ► on the iPad personally.

00:21:51 ◼   ► I like it.

00:21:53 ◼   ► And I like the way that you don't have to turn the thing on

00:21:57 ◼   ► or unlock it or do anything on the screen

00:21:59 ◼   ► to just shut the thing up if it's making noise.

00:22:01 ◼   ► But I understand that that can be less of a, ooh,

00:22:06 ◼   ► the whole fact that you could have your phone in your pocket

00:22:07 ◼   ► and maybe you are the idiot at the movie

00:22:09 ◼   ► who forgot to silence your phone,

00:22:12 ◼   ► and if it starts making a noise,

00:22:13 ◼   ► the fact that you can get that thing silenced so much quicker with that switch than you

00:22:18 ◼   ► ever could no matter what genius invented a software interface for it on the screen

00:22:23 ◼   ► is a big deal. Plus the fact that in that scenario in a movie theater, the fact that

00:22:27 ◼   ► you don't have to have the screen light up is an even bigger deal if you're a good human

00:22:31 ◼   ► being who doesn't take their phone out during movies.

00:22:40 ◼   ► So that was a huge controversy too. I don't know if you remember, but some people want

00:22:42 ◼   ► the mute switch to mute everything,

00:22:44 ◼   ► and some people wanted only to mute some things

00:22:46 ◼   ► and not alarms, for example,

00:22:47 ◼   ► and that was hugely controversial at the time.

00:22:49 ◼   ► - I actually still don't even remember how it works.

00:22:51 ◼   ► Like, if I have my phone on mute,

00:22:52 ◼   ► my morning alarm clock still makes a sound, right?

00:22:55 ◼   ► I think so.

00:22:56 ◼   ► - Yes, yes.

00:22:58 ◼   ► And some phones didn't do that,

00:22:59 ◼   ► and then it was a controversy,

00:23:00 ◼   ► like who was doing that right?

00:23:01 ◼   ► - Right, well, and then you run into that with phones

00:23:03 ◼   ► where instead of having a dedicated mute switch,

00:23:05 ◼   ► if you just, the idea is you just hold volume down

00:23:08 ◼   ► until it gets to zero,

00:23:09 ◼   ► well, that's definitely different to me than a mute switch.

00:23:12 ◼   ► But anyway, I digress.

00:23:14 ◼   ► The idea of an edge to edge phone

00:23:16 ◼   ► has been floating around for a while.

00:23:18 ◼   ► And out of, it seems like,

00:23:22 ◼   ► and I've mentioned this all the time,

00:23:24 ◼   ► but it seems like a huge source of leaks for Apple,

00:23:26 ◼   ► historically, especially for the iPhone,

00:23:29 ◼   ► has been the Asian supply chain.

00:23:31 ◼   ► There was an interesting thing earlier this summer

00:23:33 ◼   ► where it was the outline,

00:23:36 ◼   ► got a leaked copy of an internal Apple presentation

00:23:39 ◼   ► about how they, a presentation to employees

00:23:41 ◼   ► about how they deal with leaks

00:23:43 ◼   ► and their policies towards leaks,

00:23:45 ◼   ► where internally Apple claims

00:23:46 ◼   ► that they've actually gotten to the point

00:23:48 ◼   ► where fewer of the leaks are from the supply chain

00:23:51 ◼   ► and from within Apple,

00:23:53 ◼   ► which is interesting that Apple would say that,

00:23:54 ◼   ► but doesn't really jibe with what I see personally

00:23:57 ◼   ► in terms of what gets published.

00:23:59 ◼   ► I'm not disputing that that's what Apple thinks internally.

00:24:02 ◼   ► I mean, they know what they know.

00:24:05 ◼   ► - They can think anything they want.

00:24:06 ◼   ► - Right, well, and they might know things that I don't know.

00:24:09 ◼   ► I mean, one thing that they know that's interesting,

00:24:11 ◼   ► it's always interesting to me, is they know which ones are bullshit and which ones aren't.

00:24:15 ◼   ► And some of them are. There's enough stuff, I have enough claim chowder bookmarks,

00:24:22 ◼   ► that not everything that's been published can possibly be true. There's contradictory reports

00:24:27 ◼   ► out there. And the ones that are contradictory often cover themselves. The ones that know that

00:24:35 ◼   ► that they're on shaky ground.

00:24:38 ◼   ► My favorite trick is to say that Apple is still deciding.

00:24:43 ◼   ► - Yes, that's okay like a year or so out.

00:24:47 ◼   ► It gets less and less believable

00:24:48 ◼   ► when it becomes closer to August and September.

00:24:50 ◼   ► - Right, but one thing that seems very leaky to me,

00:24:53 ◼   ► and still is this year, is the display providers,

00:24:57 ◼   ► the display suppliers for Apple.

00:24:59 ◼   ► And I know they're sharp, and I guess Samsung

00:25:03 ◼   ► is the contracted company for OLEDs.

00:25:06 ◼   ► And some of this stuff, it's like not even like rumors.

00:25:11 ◼   ► I mean, some of the stuff like,

00:25:12 ◼   ► it's like in, they may not say it's Apple,

00:25:16 ◼   ► but there's like filing, regulatory filings

00:25:18 ◼   ► where these companies have said we have a,

00:25:20 ◼   ► we're providing 10 million of these displays

00:25:23 ◼   ► for a major company for a late--

00:25:26 ◼   ► - Yeah, and some of them even say Apple.

00:25:27 ◼   ► And I wonder if they get a real good phone call after that,

00:25:29 ◼   ► like at their earnings statements

00:25:30 ◼   ► or at their press conferences in China,

00:25:31 ◼   ► they'll say Apple's buying blah, blah, blah.

00:25:33 ◼   ► and you just wonder how fast that phone rings.

00:25:35 ◼   ► - Yeah.

00:25:36 ◼   ► I don't know.

00:25:38 ◼   ► I do wonder.

00:25:41 ◼   ► But, and Ming-Chi Kuo,

00:25:48 ◼   ► I think is the top rumor person for Apple,

00:25:54 ◼   ► wears the crown right now,

00:25:56 ◼   ► has been on this for a while

00:25:58 ◼   ► and has been very consistent

00:26:00 ◼   ► that Apple has three new phones coming out this year.

00:26:02 ◼   ► a 4.7 inch with an LED display,

00:26:06 ◼   ► which would be the same size display and technology

00:26:09 ◼   ► and display of the iPhone 7,

00:26:12 ◼   ► and also the 6S and the 6.

00:26:14 ◼   ► A 5.5 inch LED display,

00:26:17 ◼   ► which is the same technology

00:26:18 ◼   ► and the same exact diagonal size as the 7 Plus,

00:26:22 ◼   ► and also the 6S Plus and the 6 Plus.

00:26:25 ◼   ► And, and here's the weird one,

00:26:28 ◼   ► here's the, or at least the new one,

00:26:29 ◼   ► a 5.8 inch diagonal display

00:26:33 ◼   ► that is a different aspect ratio, skinnier and taller.

00:26:38 ◼   ► Therefore, like a wider aspect

00:26:42 ◼   ► or whichever way you want to hold the phone.

00:26:44 ◼   ► If you hold it in portrait, a skinnier, taller display,

00:26:49 ◼   ► that's an OLED from Samsung that can curve

00:26:54 ◼   ► and therefore go edge to edge

00:26:56 ◼   ► and has greatly reduced the need

00:26:58 ◼   ► for side bezels on the phone.

00:27:00 ◼   ► He's been very consistent on that.

00:27:02 ◼   ► What I bet on it, I mean, is it possible that he's wrong?

00:27:06 ◼   ► Of course, I think.

00:27:07 ◼   ► I never would bet the house on any of these rumors,

00:27:10 ◼   ► but it seems pretty good.

00:27:12 ◼   ► - Yeah, and I think the crux of what you and I

00:27:15 ◼   ► were talking about years ago was that,

00:27:17 ◼   ► how do you solve the problem of people who want,

00:27:18 ◼   ► like we were talking about the iPhone,

00:27:20 ◼   ► I guess it was the 6 Plus back then,

00:27:22 ◼   ► and it's just too big a phone for some people,

00:27:24 ◼   ► and so they go with the 6,

00:27:25 ◼   ► or back then they would stick with a 5S or something,

00:27:27 ◼   ► and you can say make a better 5S,

00:27:30 ◼   ► but what Apple was thinking is why can't we make

00:27:32 ◼   ► something that's the size of a 6

00:27:34 ◼   ► but has a display of a 6S?

00:27:36 ◼   ► And that's sort of a different way to solve that problem,

00:27:38 ◼   ► and this is the phone that tries to solve that problem.

00:27:41 ◼   ► - Apparently, you know, let's assume that it's right.

00:27:44 ◼   ► - Yeah.

00:27:45 ◼   ► - I've mentioned this to you

00:27:48 ◼   ► before we started recording the show.

00:27:49 ◼   ► I don't think that there's a ton of smoke

00:27:53 ◼   ► on the two, let's call them the regular new iPhones,

00:27:58 ◼   ► the 4.7 and 5.5 inch LEDs.

00:28:01 ◼   ► The most obvious thing Apple could do

00:28:03 ◼   ► would be to make an iPhone 7S and 7S Plus

00:28:06 ◼   ► because every single time they've come out with a phone

00:28:10 ◼   ► with a number, starting with the 3G,

00:28:12 ◼   ► then the 4, then the 5, then the 6,

00:28:15 ◼   ► the following year they've come out with a phone

00:28:17 ◼   ► with the exact same name, with an S tacked to the end,

00:28:22 ◼   ► and with a more or less roughly same form factor, usually

00:28:27 ◼   ► case compatible.

00:28:29 ◼   ► And if not case compatible, so close to case compatible

00:28:33 ◼   ► that you can effectively use--

00:28:36 ◼   ► you can use an iPhone 6 case on a 6s.

00:28:39 ◼   ► You can use a 6s case on a 6.

00:28:40 ◼   ► And everything lines up.

00:28:42 ◼   ► The buttons line up.

00:28:43 ◼   ► And there have been changes.

00:28:47 ◼   ► You know, I think it was the 5s that introduced Touch ID,

00:28:51 ◼   ► which is more, you know, you could tell just by looking at it. There, you can just eyeball

00:28:55 ◼   ► it. You don't have to turn it on. You don't have to run like a benchmark or something

00:28:58 ◼   ► to tell that it was new. But the Touch ID sensor was where the old home button was,

00:29:04 ◼   ► so it didn't really interfere with any kind of case design or something like that.

00:29:08 ◼   ► And this, the 4S had the better antenna, though, with the extra piece of plastic in it.

00:29:13 ◼   ► Right. Right. We had the, it's actually, it's like one of my favorite eras of iPhone

00:29:19 ◼   ► because there was the weird Verizon iPhone in between, which had the futuristic antenna design.

00:29:27 ◼   ► Yeah, I think it had the dual antenna that could switch intelligently depending if your hand was

00:29:31 ◼   ► blocking too much of it to get a signal. Right, and those black lines that separated the pieces

00:29:36 ◼   ► of the side frame, the Verizon iPhone 4 had the black lines that separated the components that

00:29:44 ◼   ► matched with the next year's 4S.

00:29:48 ◼   ► Yes.

00:29:48 ◼   ► So there was a weird--

00:29:50 ◼   ► it was sort of like the iPhone 4 and 1/2.

00:29:52 ◼   ► Really.

00:29:53 ◼   ► It really was.

00:29:54 ◼   ► Yeah, yeah, exactly.

00:29:56 ◼   ► Well, I had to get the CDMA antenna in there,

00:29:59 ◼   ► and that was the best way to do it.

00:30:00 ◼   ► The Verizon iPhone 4 is one of my all-time-- probably

00:30:04 ◼   ► maybe my second or third favorite iPhone of all time.

00:30:07 ◼   ► Because I had the better antenna,

00:30:09 ◼   ► and the other little thing that it had that no iPhone had

00:30:12 ◼   ► until recently was it didn't have those regulatory body

00:30:18 ◼   ► logos inscribed on the back.

00:30:20 ◼   ► Because they didn't need to sell it worldwide,

00:30:22 ◼   ► they were only going to sell it in the US.

00:30:24 ◼   ► And so they didn't have to put all those stupid logos

00:30:26 ◼   ► on the back.

00:30:27 ◼   ► Yeah.

00:30:29 ◼   ► It was beautiful.

00:30:30 ◼   ► I really liked it.

00:30:33 ◼   ► So anyway, the most obvious thing Apple

00:30:35 ◼   ► could be planning for this year would be to do an iPhone 7S.

00:30:39 ◼   ► Assuming that there is new 4.7 inch and 5.5 inch phones

00:30:44 ◼   ► and they're not just going to keep selling the 7

00:30:46 ◼   ► and the 7 Plus and introduce one new phone,

00:30:50 ◼   ► the iPhone 8 or whatever you wanna call it,

00:30:52 ◼   ► that's what Apple has done for years,

00:30:54 ◼   ► is they've made one new phone per year.

00:30:56 ◼   ► Or at least that's the narrative.

00:30:59 ◼   ► I think that with the Plus phones

00:31:01 ◼   ► that they've already started,

00:31:04 ◼   ► it's like a slow-breaking, like a--

00:31:07 ◼   ► - Yeah.

00:31:08 ◼   ► It's like that big landmass breaking off Antarctica.

00:31:11 ◼   ► It takes a while, but you can sort of see the cracks coming

00:31:13 ◼   ► for a while and then all of a sudden--

00:31:15 ◼   ► - You go from Pangaea to a bunch of continents.

00:31:17 ◼   ► - Yeah, and all of a sudden it's, wow,

00:31:19 ◼   ► that's a different strategy.

00:31:21 ◼   ► - So if they did that though, if they went with 7S

00:31:23 ◼   ► and 7S+, it's usually, like they introduce a new color

00:31:27 ◼   ► and then they do one special feature.

00:31:29 ◼   ► So it could be, it will have an A11 chip

00:31:31 ◼   ► and it'll have inductive charging or something

00:31:33 ◼   ► and that would be the positioning for it.

00:31:35 ◼   ► - Right, but the general rules,

00:31:38 ◼   ► and again, Apple can do whatever it wants.

00:31:40 ◼   ► These are just names, right?

00:31:41 ◼   ► I mean, Apple could make the thing a perfect square,

00:31:45 ◼   ► like an old Polaroid, and still call it the iPhone 7S.

00:31:48 ◼   ► - Triangle-shaped and called it the Galactica phone.

00:31:50 ◼   ► - No, and they can still call it the iPhone 7S, right?

00:31:53 ◼   ► You know, they could make it totally different,

00:31:56 ◼   ► make it a circle, make it a triangle,

00:31:57 ◼   ► and still call it the iPhone 7S,

00:31:59 ◼   ► and we'd have to worry about the mental health

00:32:04 ◼   ► Phil Schiller, but they could do it, right?

00:32:07 ◼   ► - Yeah, they just go and enter a name in the machine

00:32:09 ◼   ► and it gets printed on boxes.

00:32:11 ◼   ► It's not easy for them.

00:32:12 ◼   ► - I have no idea.

00:32:15 ◼   ► I have no, I heard things for a while.

00:32:18 ◼   ► I haven't heard anything in a long time

00:32:21 ◼   ► about anything related to new iPhones.

00:32:23 ◼   ► So I have no inside sources, no secret birdies

00:32:26 ◼   ► on any of this stuff.

00:32:27 ◼   ► All I know is what I read on the rumor reports.

00:32:29 ◼   ► And I also know what makes sense.

00:32:34 ◼   ► I kinda hope that that's not what they're doing.

00:32:38 ◼   ► I kinda hope that, assuming it's true,

00:32:41 ◼   ► this is all based on the assumption that Ming-Chi Kuo

00:32:44 ◼   ► knows exactly what he's talking about,

00:32:46 ◼   ► and that there is a new phone, some kind of new hardware,

00:32:49 ◼   ► 4.7 inch, 5.5 inch.

00:32:50 ◼   ► I hope that those are the iPhone 8 and 8 Plus,

00:32:55 ◼   ► and maybe they get new names too.

00:32:58 ◼   ► Maybe they just drop numbers completely,

00:33:01 ◼   ► but that they have physical changes

00:33:04 ◼   ► that make them, if not radically different,

00:33:06 ◼   ► significantly different.

00:33:07 ◼   ► Like, for example, if all three phones

00:33:10 ◼   ► have dual camera designs.

00:33:12 ◼   ► Like that would totally render iPhone 7 cases

00:33:17 ◼   ► inadequate for this new phone,

00:33:19 ◼   ► even though it's a same-sized display

00:33:21 ◼   ► because there wouldn't be room for the second camera lens.

00:33:24 ◼   ► - And that fits sort of what they ended up doing

00:33:26 ◼   ► for the iPad is that they went to iPad Mini, iPad,

00:33:30 ◼   ► and then iPad Pro for a while,

00:33:31 ◼   ► and you had the existing designs, two sizes,

00:33:34 ◼   ► almost identical, 'cause the Air 2 and the Mini 4,

00:33:37 ◼   ► I think, were identical except for size,

00:33:39 ◼   ► and then the Pro got introduced on top of that,

00:33:41 ◼   ► and I could see something where they have those two iPhones,

00:33:43 ◼   ► it's the iPhone, iPhone Plus, and then iPhone Pro,

00:33:46 ◼   ► if that's what you really want.

00:33:47 ◼   ► - Right, I could totally see them going with that,

00:33:49 ◼   ► and we can talk about naming separately,

00:33:50 ◼   ► but I could, just as an example,

00:33:52 ◼   ► I could totally see the names iPhone, iPhone Plus,

00:33:56 ◼   ► and iPhone Pro as the three names of the product.

00:33:58 ◼   ► And that next year they just have the new iPhone,

00:34:01 ◼   ► new iPhone Plus, new iPhone Pro until, you know, whatever.

00:34:04 ◼   ► But that would, that would,

00:34:09 ◼   ► I just don't, I don't feel like anybody knows.

00:34:11 ◼   ► I really, I really don't.

00:34:13 ◼   ► - And we get so much, there's so much angst

00:34:15 ◼   ► about all of this.

00:34:16 ◼   ► Like one of my favorite lines from you has always been,

00:34:18 ◼   ► "Everyone drinks the same Coke,

00:34:19 ◼   ► "whether you're the janitor or the president,

00:34:21 ◼   ► "you drink the same Coke."

00:34:22 ◼   ► And this year, even though Apple has not announced anything,

00:34:24 ◼   ► the mere speculation that there'll be an iPhone

00:34:26 ◼   ► that is in some ways subjectively, objectively better

00:34:30 ◼   ► than previous iPhones has created an incredible

00:34:33 ◼   ► sense of offense among some people in the community.

00:34:35 ◼   ► Like how could Apple make an iPhone that's more expensive,

00:34:38 ◼   ► that's more premium, that if I buy an iPhone

00:34:40 ◼   ► it's not the best iPhone?

00:34:42 ◼   ► - Yeah.

00:34:43 ◼   ► - Which is what they didn't get with the iPad Pro.

00:34:45 ◼   ► - Wait, wait, say that again.

00:34:51 ◼   ► - They didn't get that sentiment with the iPad Pro.

00:34:53 ◼   ► that didn't seem to be a huge sentiment in the community,

00:34:55 ◼   ► but how dare they make a better iPad?

00:34:56 ◼   ► - Yeah, I don't think people are as emotional

00:34:58 ◼   ► about iPads as they are iPhones.

00:35:00 ◼   ► And the iPad has sort of,

00:35:03 ◼   ► but long ago bifurcated into,

00:35:08 ◼   ► it's not quite obvious what the best iPad was.

00:35:11 ◼   ► Like I think that there was a case

00:35:12 ◼   ► when they first came out with the iPad mini

00:35:14 ◼   ► that the iPad mini, I liked it,

00:35:16 ◼   ► I thought it was the best iPad,

00:35:18 ◼   ► even though it was like a year behind on the,

00:35:21 ◼   ► It was like, let's take last, you know,

00:35:23 ◼   ► for a couple of years what they were doing was,

00:35:25 ◼   ► let's take last year's 9.7 inch iPad,

00:35:28 ◼   ► put that system in a chip and components

00:35:30 ◼   ► into the smaller case and sell it at a lower price.

00:35:33 ◼   ► - Didn't even have a retina display when it debuted.

00:35:34 ◼   ► - Right, and I thought, you know,

00:35:37 ◼   ► it really was, it's just the case,

00:35:39 ◼   ► I've mentioned this before,

00:35:41 ◼   ► but it's just me hitting my 40s

00:35:42 ◼   ► and my eyesight deteriorating.

00:35:46 ◼   ► The fact that the iPad mini screen

00:35:47 ◼   ► was just pixel for pixel, exactly the bigger iPad screen,

00:35:50 ◼   ► so everything was just shrunk pixel for pixel,

00:35:53 ◼   ► exactly the same.

00:35:54 ◼   ► Like your software didn't have to,

00:35:55 ◼   ► developers didn't have to do a damn thing

00:35:57 ◼   ► to support the iPad mini.

00:35:59 ◼   ► Even if your layout was completely based on

00:36:02 ◼   ► the assumption of the pixels of the screen

00:36:05 ◼   ► being exactly the same, it literally was

00:36:07 ◼   ► because it was just the same number of pixels

00:36:09 ◼   ► and they were just two thirds smaller, roughly.

00:36:12 ◼   ► I liked it better, at least when my eyesight was smaller.

00:36:16 ◼   ► And my son, who's still very young and still has,

00:36:18 ◼   ► He much prefers the mini iPad size.

00:36:22 ◼   ► So I think that the iPad line sort of split where it wasn't

00:36:25 ◼   ► quite clear what was best.

00:36:27 ◼   ► Whereas the basic gist of the iPhone has been for years,

00:36:34 ◼   ► one new model per year at the high end.

00:36:37 ◼   ► Like even with the 5C, which you mentioned before,

00:36:39 ◼   ► which was clearly a strategic exception,

00:36:42 ◼   ► dipping their toes in an experiment that--

00:36:45 ◼   ► I don't think it was the failure that people call it,

00:36:47 ◼   ► but it clearly wasn't as big a hit as they had perhaps hoped.

00:36:51 ◼   ► - And I like that they do that.

00:36:52 ◼   ► Like one of the things that scares me is that when,

00:36:54 ◼   ► we get this, we have two sentiments.

00:36:55 ◼   ► We get that Apple is boring and that Apple changes too much.

00:36:58 ◼   ► And they're both, they're sort of two truths.

00:37:00 ◼   ► And people believe both of them at the same time.

00:37:02 ◼   ► And I think it's just human nature.

00:37:03 ◼   ► But if Apple doesn't take risks,

00:37:05 ◼   ► then Apple is losing a sense of innovation.

00:37:06 ◼   ► They're nothing since Steve Jobs.

00:37:08 ◼   ► They're boring.

00:37:08 ◼   ► You know, everyone else is running circles around them.

00:37:11 ◼   ► But when they do, when they try something like iPhone 5C,

00:37:13 ◼   ► or if they do this iPhone X, iPhone 8 thing,

00:37:16 ◼   ► then how can Apple do this?

00:37:17 ◼   ► You know, they're betraying us as customers.

00:37:19 ◼   ► Why are they-- it's a huge risk.

00:37:21 ◼   ► How can they-- you know, it's-- they can't win either way.

00:37:23 ◼   ► And I don't think the goal is for them to win.

00:37:25 ◼   ► But I think as a company, to be Apple,

00:37:26 ◼   ► they have to keep trying these risky things.

00:37:31 ◼   ► Yeah, I agree, too.

00:37:32 ◼   ► And I've-- you know, from talking to people at Apple,

00:37:37 ◼   ► you know, in product briefings and stuff like that,

00:37:40 ◼   ► I mean, it's very--

00:37:41 ◼   ► I mean, again, you never know what's bullshit and what's not.

00:37:43 ◼   ► but I really do believe it,

00:37:45 ◼   ► that they don't have any kind of magic science

00:37:50 ◼   ► behind the scenes that predicts demand.

00:37:53 ◼   ► They don't, there is no, I think there's a lot of people

00:37:55 ◼   ► who assume that Apple is so effective and so smart

00:37:58 ◼   ► and that they've, that there's some kind of spreadsheet

00:38:02 ◼   ► on Tim Cook's, I was gonna say MacBook,

00:38:05 ◼   ► but let's just say Tim Cook's iPad Pro even,

00:38:07 ◼   ► that he can hit a button and it tells him exactly what to do

00:38:13 ◼   ► how many of each phone to make and which design is going to sell and what quantities in which country

00:38:18 ◼   ► and none of that's true and that they you know one of the most surprising things from Apple's

00:38:22 ◼   ► perspective every year is how things change from country to country and like how the 5c sold in the

00:38:28 ◼   ► United States versus in Germany and stuff like that and they're saying who would have known

00:38:32 ◼   ► that something I don't even know if that's true maybe it's the other way around but

00:38:35 ◼   ► that you know that that in Germany the 5c was surprisingly popular and they had no no idea of

00:38:40 ◼   ► and they had to redirect all these shipments

00:38:44 ◼   ► that were originally meant for the US from there,

00:38:46 ◼   ► instead go the other way, go over to Germany,

00:38:49 ◼   ► because that's where people are buying them.

00:38:51 ◼   ► They don't know.

00:38:52 ◼   ► And you see it--

00:38:53 ◼   ► - Steve Jobs was a,

00:38:53 ◼   ► I was gonna say Steve Jobs was a really good

00:38:56 ◼   ► taste predictor too, but he didn't,

00:38:58 ◼   ► not everything he did was a huge success.

00:38:59 ◼   ► Just the things that were were so successful,

00:39:02 ◼   ► they obliterated almost any memory

00:39:03 ◼   ► of the things that didn't do as well.

00:39:05 ◼   ► - Right, and even so, I mean,

00:39:08 ◼   ► People often look back at the Mac G4 Cube,

00:39:13 ◼   ► and the first thing that comes to mind

00:39:16 ◼   ► is that it was susceptible to cracks.

00:39:18 ◼   ► But that could have been fixed.

00:39:21 ◼   ► If it had sold in good enough quantities,

00:39:23 ◼   ► they could have just fixed whatever it was

00:39:26 ◼   ► that was causing the plastic to crack.

00:39:28 ◼   ► The problem with the Mac Cube was that in the market,

00:39:31 ◼   ► people didn't see enough value to pay a premium

00:39:33 ◼   ► for a small box that was beautiful on your desk.

00:39:36 ◼   ► people instead would pay less for a less elegant iMac,

00:39:41 ◼   ► you know, a big, you know, it's at the time was a big CRT,

00:39:46 ◼   ► I think, or pay the same amount and get a Mac Pro

00:39:51 ◼   ► that had way more performance than the Mac cube.

00:39:53 ◼   ► Nobody wanted to pay the premium just for the small box.

00:39:56 ◼   ► And--

00:39:56 ◼   ► - And they went to be, there was the iPod fatty nano

00:40:00 ◼   ► and there was the iPod shuffle with no buttons on it,

00:40:03 ◼   ► you know, that they all walked,

00:40:04 ◼   ► that they both walked back very quickly.

00:40:06 ◼   ► - Yeah, yeah, you know, they, you know, they, yeah,

00:40:09 ◼   ► Fat Nano, Fat Nano, Fat Nano was one of the most

00:40:13 ◼   ► curious ones, someday I would love to get the story on that

00:40:16 ◼   ► because I have to say right from when I first saw it,

00:40:18 ◼   ► I was like, well, I don't like that anywhere near

00:40:20 ◼   ► as much as last year's.

00:40:21 ◼   ► - Yep.

00:40:22 ◼   ► - And there were no features on it

00:40:23 ◼   ► that were compelling either.

00:40:24 ◼   ► It wasn't like, well, I don't like the way it looks,

00:40:26 ◼   ► but it has blank that the other one didn't have.

00:40:28 ◼   ► It just was the exact same thing, but in a--

00:40:31 ◼   ► (laughing)

00:40:32 ◼   ► - It was a portrait device with a landscape video

00:40:34 ◼   ► that was very--

00:40:35 ◼   ► - Weird. - Very strange.

00:40:36 ◼   ► - My point is that those things happened

00:40:39 ◼   ► and Apple took those risks,

00:40:40 ◼   ► and once in a while they had much bigger hits.

00:40:41 ◼   ► But I think it's almost like that criticism of Pixar.

00:40:45 ◼   ► Not everyone is gonna be a huge hit,

00:40:46 ◼   ► but they have to try, they have to swing.

00:40:49 ◼   ► - And though it's also the case,

00:40:50 ◼   ► it is a similar, it's a decent analogy to Pixar

00:40:53 ◼   ► in so far as that they have to take chances sometimes,

00:40:58 ◼   ► but they do have to be very careful about those chances

00:41:02 ◼   ► because they can't really afford a complete dud,

00:41:04 ◼   ► and the iPhone is certainly that case.

00:41:06 ◼   ► It's worth going back to that Warhol thing

00:41:10 ◼   ► 'cause I've quoted it and people,

00:41:12 ◼   ► I wrote a piece about two weeks ago,

00:41:15 ◼   ► basic gist of it, making the case of,

00:41:19 ◼   ► I don't think people are thinking through this,

00:41:22 ◼   ► the rumors of these three new phones,

00:41:24 ◼   ► which were covered a couple minutes ago.

00:41:26 ◼   ► People aren't thinking this through.

00:41:27 ◼   ► If those rumors are true, I think that people's assumptions

00:41:32 ◼   ► about how these new iPhones are gonna be priced

00:41:34 ◼   ► and how they're gonna be available are way wrong.

00:41:37 ◼   ► Insofar as that what it seemed,

00:41:39 ◼   ► and the reaction to my article made clear

00:41:42 ◼   ► that this is what people were thinking,

00:41:43 ◼   ► is that they were thinking that the fancy new iPhone

00:41:46 ◼   ► with the OLED display,

00:41:47 ◼   ► I've been calling it the iPhone Pro,

00:41:50 ◼   ► people have been calling it iPhone X, iPhone edition,

00:41:53 ◼   ► whatever you wanna call it,

00:41:54 ◼   ► that it's going to be the new iPhone for the year,

00:41:59 ◼   ► just like in previous years.

00:42:01 ◼   ► and it will come in at around the same prices

00:42:04 ◼   ► as the iPhone 7 and 7 Plus,

00:42:06 ◼   ► meaning like a 650, 700ish starting point

00:42:10 ◼   ► for the lowest end configuration,

00:42:12 ◼   ► which is really just about storage space

00:42:14 ◼   ► and a high-end option up to,

00:42:17 ◼   ► right now I think that the 7 Plus sells for 969,

00:42:20 ◼   ► so maybe somewhere, but under 1,000.

00:42:23 ◼   ► And the gist of my argument is,

00:42:26 ◼   ► if you look at the rumors,

00:42:27 ◼   ► especially that there's going to be, quote,

00:42:28 ◼   ► new 4.7 and 5.5 inch phones.

00:42:31 ◼   ► And some of the rumors include that they're going to get more than just--

00:42:34 ◼   ► it's not just like the series one Apple Watch, where it's a very--

00:42:42 ◼   ► pretty much like the series, the original Apple Watch,

00:42:45 ◼   ► but just with the new system on a chip, but otherwise almost

00:42:50 ◼   ► indistinguishable.

00:42:52 ◼   ► I don't think it's going to be like that at all.

00:42:54 ◼   ► And if it is, then that would mean that these new 4.7 and 5.5 inch phones

00:42:58 ◼   ► would probably come in at the same prices as the 7 and 7 Plus today.

00:43:03 ◼   ► And therefore, the new OLED phone would have to have a higher price.

00:43:09 ◼   ► And combine that with the fact that all these rumor mill things coming from the supply chain

00:43:13 ◼   ► are saying that this thing is going to be supply constrained, might not even ship, period,

00:43:18 ◼   ► until surprisingly late in the iPhone cycle, like November or even December, they're saying.

00:43:25 ◼   ► may not get one in their hands until December.

00:43:29 ◼   ► Again, if that's the case, it has to have a-- well,

00:43:32 ◼   ► it doesn't have to.

00:43:33 ◼   ► I mean, obviously Apple could just eat money, you know,

00:43:35 ◼   ► and--

00:43:35 ◼   ► Yes.

00:43:36 ◼   ► --and leave money on the table.

00:43:38 ◼   ► But the rules of supply and demand

00:43:41 ◼   ► would suggest that it should have a higher price.

00:43:44 ◼   ► And I say should not, again, not in a moral sense,

00:43:47 ◼   ► but according to the rules of supply and demand,

00:43:49 ◼   ► where if there's a product--

00:43:50 ◼   ► They could do like AirPods, where they sell them

00:43:52 ◼   ► close to what they can, and then they're continually out

00:43:54 ◼   ► of stock or they could price them so that it sort of balances and normalizes

00:43:57 ◼   ► out the supply. Right, and AirPods are worth going back to as an example. I

00:44:01 ◼   ► think, for example, if Apple wanted to right now or at least and if they had

00:44:04 ◼   ► any idea of how tightly constrained they were going to be all along, they could

00:44:09 ◼   ► have sold out AirPods for at least double the price or almost double, let's

00:44:14 ◼   ► say $2.99, which is a little less than double because they sell for $1.59, but

00:44:18 ◼   ► if AirPods sold for $2.99, I think that they would still be supply constrained

00:44:22 ◼   ► right now. I think there'd be enough people buying them for $2.99 that the people who do buy them

00:44:26 ◼   ► would say enough rave things about them. I mean, I would still rave about them. I would still be

00:44:33 ◼   ► happy if I had purchased them. I would obviously at $2.99 would be a little bit more conservative

00:44:39 ◼   ► about recommending them, and obviously people would have double the anxiety about losing them,

00:44:44 ◼   ► et cetera, but I still think that they'd be sold out because clearly there's not enough of them.

00:44:49 ◼   ► And I don't think the people who do buy them are particularly price sensitive at that point.

00:44:53 ◼   ► They want the new technology now.

00:44:55 ◼   ► I think that they set the price because that's the other thing is that Apple does see prices

00:44:59 ◼   ► as part of the marketing of a product.

00:45:03 ◼   ► And that's outside just the simple rules of supply and demand.

00:45:09 ◼   ► They're not looking to just price gauge what they can get right now this year, this quarter

00:45:14 ◼   ► for this product.

00:45:15 ◼   ► about setting a value proposition for this product

00:45:18 ◼   ► line for years to come.

00:45:19 ◼   ► That's why the Mac Pro, as a perfect example,

00:45:22 ◼   ► didn't drop in price even when it wasn't updated for 17 years.

00:45:26 ◼   ► Yeah.

00:45:27 ◼   ► Yeah, they don't want anyone to see a race to the bottom

00:45:29 ◼   ► in their market.

00:45:30 ◼   ► Right, because 18 years later, next year,

00:45:32 ◼   ► when they come out with the new Mac Pro,

00:45:33 ◼   ► they still want those high price points.

00:45:35 ◼   ► Absolutely.

00:45:36 ◼   ► You know, it's the complete opposite of, say, Dell.

00:45:38 ◼   ► And this drives people nuts who know

00:45:40 ◼   ► what these components cost.

00:45:41 ◼   ► But like, you go and configure a Dell whatever

00:45:45 ◼   ► with this CPU and this much RAM and it's this type of RAM,

00:45:49 ◼   ► it's DDR4, whatever, and this graphics card.

00:45:53 ◼   ► And you wait, and then you go back next week

00:45:56 ◼   ► and configure the same machine, the price might be $20 lower.

00:46:00 ◼   ► Dell actually swings their--

00:46:02 ◼   ► and you get these weird prices that the system

00:46:05 ◼   ► is going to cost $1,373.

00:46:09 ◼   ► They don't--

00:46:09 ◼   ► And I'm not convinced if you log in again a few hours later,

00:46:11 ◼   ► it won't just randomly give you a different price.

00:46:13 ◼   ► Right.

00:46:13 ◼   ► Whereas Apple picks these numbers that are--

00:46:15 ◼   ► the numbers are part of the pricing,

00:46:17 ◼   ► and they tend to pick even numbers, like $9.99 or whatever.

00:46:26 ◼   ► And the prices do not move as the year goes on.

00:46:29 ◼   ► It's part of the marketing.

00:46:33 ◼   ► Anyway, I wrote this article.

00:46:36 ◼   ► Got some attention.

00:46:38 ◼   ► It really-- I knew it was going to make some people upset,

00:46:41 ◼   ► but it surprised me how far outside the normal sphere

00:46:44 ◼   ► of things it got.

00:46:46 ◼   ► I got a phone call or email from CNBC.

00:46:49 ◼   ► CNBC wanted me on in the afternoon on TV to talk about it.

00:46:52 ◼   ► And I might have done it, depending

00:46:54 ◼   ► on where they wanted me to go.

00:46:55 ◼   ► But I was on vacation at the time.

00:46:57 ◼   ► There's no way I could do it.

00:46:59 ◼   ► But that does not happen typically for me

00:47:02 ◼   ► with my articles.

00:47:03 ◼   ► I'm not trying to be fake, humble.

00:47:07 ◼   ► But you know my audience.

00:47:08 ◼   ► I write, and it's popular.

00:47:10 ◼   ► but it's popular within a very narrow niche.

00:47:12 ◼   ► It's not the type of thing where I write a column

00:47:15 ◼   ► for "Daring Fireball" and CNBC wants me to talk about it.

00:47:18 ◼   ► - Yeah, you're not a sensationalist,

00:47:19 ◼   ► which is typically what they favor.

00:47:21 ◼   ► - Right, although I think suggesting

00:47:24 ◼   ► that the starting price might be as high as $1,200

00:47:26 ◼   ► qualifies as sensational, but I think sensational

00:47:29 ◼   ► in that it might be realistic.

00:47:31 ◼   ► - Well, you provided a lot of logic to back it up.

00:47:33 ◼   ► It wasn't, you know, how, like someone else

00:47:35 ◼   ► might have put a headline like Apple looking to gouge you

00:47:37 ◼   ► for 1500 bucks on the next iPhone.

00:47:39 ◼   ► Right. So anyway, you mentioned the Andy Warhol quote, and I've mentioned it many times before,

00:47:44 ◼   ► and people have written to me, and this is, I need to, I think I need to bring it up and respond to

00:47:48 ◼   ► it. Many times over the years I've mentioned that the iPhone reminds me of Andy Warhol's quote about

00:47:54 ◼   ► Coca-Cola in America. Here's the quote. This is Andy Warhol. "What's great about this country is

00:47:58 ◼   ► that America started the tradition where the richest consumers buy essentially the same things

00:48:03 ◼   ► as the poorest. You can be watching TV and see Coca-Cola and you know that the president drinks

00:48:08 ◼   ► Coke, Liz Taylor drinks Coke, and just think,

00:48:11 ◼   ► you can drink Coke too.

00:48:12 ◼   ► A Coke is a Coke and no amount of money

00:48:14 ◼   ► can get you a better Coke than the one the bum on the corner

00:48:17 ◼   ► is drinking.

00:48:18 ◼   ► All the Cokes are the same and all the Cokes are good.

00:48:20 ◼   ► Liz Taylor knows it, the president knows it,

00:48:22 ◼   ► the bum knows it, and you know it.

00:48:24 ◼   ► It's a great quote, and it's totally true, or it was true.

00:48:28 ◼   ► And there is some aspect of that to the iPhone.

00:48:33 ◼   ► But Cokes cost like $1.

00:48:39 ◼   ► Cokes are things that a literal panhandler could afford.

00:48:45 ◼   ► A bum on the corner really can buy a Coke.

00:48:49 ◼   ► I think a lot of them buy other beverages,

00:48:51 ◼   ► but if they're really thirsty for a Coke, they can buy one.

00:48:56 ◼   ► They can't buy an iPhone.

00:48:57 ◼   ► Let's face it.

00:48:58 ◼   ► Number one, the analogy breaks down to some degree,

00:49:01 ◼   ► insofar as that the cheapest iPhone Apple has ever sold is,

00:49:04 ◼   ► in the grand scheme of this globe and humanity,

00:49:07 ◼   ► an extraordinarily expensive premium product.

00:49:10 ◼   ► - I think they also, that quote is absolutely true,

00:49:13 ◼   ► but it doesn't really understand.

00:49:14 ◼   ► Coke as a business sells Coke,

00:49:16 ◼   ► but they would, sort of like Apple just selling iPhone,

00:49:18 ◼   ► they would never have grown as a business

00:49:20 ◼   ► if all they ever did was sell that one same Coke,

00:49:23 ◼   ► which is why Coca-Cola is one,

00:49:24 ◼   ► if you would go and look at Coca-Cola,

00:49:26 ◼   ► it's one of the most diversified companies you'll find.

00:49:28 ◼   ► They have their fingers into almost everything,

00:49:30 ◼   ► and they have whole lines of beverages

00:49:31 ◼   ► that are more expensive than Coke.

00:49:33 ◼   ► It's just they're smart about branding

00:49:35 ◼   ► and sometimes people don't know exactly what they do.

00:49:37 ◼   ► But Pepsi has, what is it, Pepsi 1897

00:49:40 ◼   ► that has real sugar in it.

00:49:41 ◼   ► - And it costs more money.

00:49:43 ◼   ► - Yeah.

00:49:44 ◼   ► - And I personally do not care for the taste of Pepsi Cola.

00:49:47 ◼   ► I never have.

00:49:48 ◼   ► I do enjoy the taste of a Coca Cola.

00:49:50 ◼   ► And at least here in United,

00:49:52 ◼   ► do you guys have Mexican Coke up in Canada

00:49:54 ◼   ► or are you too far away?

00:49:55 ◼   ► - We have some, I don't know if it's similar,

00:49:56 ◼   ► but we have kosher Coke that has real sugar in it.

00:49:59 ◼   ► then it might be very similar.

00:50:00 ◼   ► So in America, there's this,

00:50:02 ◼   ► it's to the point now where you can buy it at Target.

00:50:06 ◼   ► It's really become almost a mass market.

00:50:09 ◼   ► It seems like a Coca-Cola company at first

00:50:11 ◼   ► was sort of almost trying to,

00:50:14 ◼   ► almost considered it like a gray market product

00:50:16 ◼   ► that they wanted retailers not to sell.

00:50:19 ◼   ► And you'd have to go to,

00:50:20 ◼   ► when I first heard of it,

00:50:22 ◼   ► you had to go to like Mexican restaurants,

00:50:25 ◼   ► like real Mexican restaurants here in the city,

00:50:27 ◼   ► like not like a chain Mexican restaurants.

00:50:31 ◼   ► - No Taco Bell.

00:50:32 ◼   ► - Right, but like a little mom and pop

00:50:33 ◼   ► real Mexican restaurant and they would sell

00:50:35 ◼   ► Mexican Coca Cola because in Mexico,

00:50:37 ◼   ► like there's this whole complicated,

00:50:39 ◼   ► I don't wanna go too far into it,

00:50:41 ◼   ► I think most people probably know it,

00:50:42 ◼   ► but because the United States is A, grows a lot of corn

00:50:45 ◼   ► and B, because of weird government subsidies,

00:50:48 ◼   ► ends up paying farmers to grow way more corn

00:50:51 ◼   ► than anybody would ever actually eat

00:50:53 ◼   ► in terms of eating things that are made with corn.

00:50:57 ◼   ► It actually is super cheap to use excess corn

00:51:00 ◼   ► to turn it into corn syrup, which is a form of sugar,

00:51:03 ◼   ► that it becomes phenomenally cheaper

00:51:05 ◼   ► than cane sugar made from sugar cane.

00:51:09 ◼   ► And the hitch is that corn syrup,

00:51:13 ◼   ► most people do not consider things that are,

00:51:15 ◼   ► if you substitute corn syrup for cane sugar

00:51:17 ◼   ► in most recipes, it does not taste as good.

00:51:20 ◼   ► It's nowhere near as different

00:51:21 ◼   ► as substituting a sugar substitute,

00:51:24 ◼   ► you know, like what's in Diet Coke or Coke Zero

00:51:26 ◼   ► or something like that.

00:51:28 ◼   ► But it's definitely a difference.

00:51:31 ◼   ► And I don't know anybody who can't taste test the difference

00:51:34 ◼   ► between a corn syrup Coke and a,

00:51:37 ◼   ► well, I'm sure there are some people

00:51:38 ◼   ► who just don't drink sugared stuff, period.

00:51:40 ◼   ► But I could easily, I would bet thousands of dollars

00:51:43 ◼   ► that I could Pepsi challenge the difference

00:51:44 ◼   ► between a corn syrup Coke and a Mexican Coke.

00:51:47 ◼   ► And I prefer the Mexican Coke. - Yeah, Pepsi Retro,

00:51:48 ◼   ► I think, too, which is the same sugar-based Coke.

00:51:50 ◼   ► - Well, anyway, guess what?

00:51:51 ◼   ► Mexican Coke tastes or it costs more money.

00:51:54 ◼   ► So you can buy a better Coke.

00:51:58 ◼   ► Not all the Cokes are the same anymore.

00:52:00 ◼   ► - And they test a lot of things and some of them fail

00:52:02 ◼   ► and they get rid of them and if some of them succeed,

00:52:04 ◼   ► they double down on them,

00:52:05 ◼   ► which I think is what Apple needs to do.

00:52:07 ◼   ► - My favorite part of this, and again,

00:52:10 ◼   ► it's just a thing that popped into my head

00:52:13 ◼   ► and it is obviously a first world privilege type situation.

00:52:18 ◼   ► But I remember, I've told this story before,

00:52:21 ◼   ► One of the, when I used to go to South by Southwest,

00:52:24 ◼   ► so I don't know, it was before,

00:52:26 ◼   ► I think it's been at least four or five years since I did,

00:52:28 ◼   ► but sometime four or five years ago, roughly,

00:52:30 ◼   ► where I was at South by Southwest,

00:52:34 ◼   ► and some friends and I went out to a steak dinner,

00:52:39 ◼   ► and we had a nice little meal,

00:52:43 ◼   ► and as we were leaving,

00:52:44 ◼   ► and this South by Southwest takes place in Austin, Texas,

00:52:48 ◼   ► we were leaving, people had to go to the restroom

00:52:50 ◼   ► before we left or waiting to get seated,

00:52:55 ◼   ► standing by himself, was Michael Dell.

00:52:58 ◼   ► And I knew who he was, and I was like,

00:52:59 ◼   ► "Wow, there's Michael Dell."

00:53:02 ◼   ► And he was poking at some kind of Windows-based cell phone.

00:53:07 ◼   ► And I thought, "Wow, there's Michael Dell, a billionaire."

00:53:10 ◼   ► Great innovators, guy who truly changed the world.

00:53:14 ◼   ► He was the guy who more or less invented

00:53:15 ◼   ► the PC clone business.

00:53:17 ◼   ► - And a lot of supply chain stuff,

00:53:19 ◼   ► Logistical management.

00:53:20 ◼   ► Right.

00:53:21 ◼   ► It's all sorts of stuff.

00:53:23 ◼   ► Well-deserved, tremendous success.

00:53:25 ◼   ► But there he is using--

00:53:26 ◼   ► I don't know if it was--

00:53:27 ◼   ► I don't even know if Dell made phones.

00:53:29 ◼   ► But he wasn't using an iPhone.

00:53:30 ◼   ► He was using some kind of Windows phone type thing.

00:53:32 ◼   ► So my first thought is, wow, there's Michael Dell.

00:53:34 ◼   ► And then my second thought was, holy shit,

00:53:37 ◼   ► I have a better cell phone than Michael Dell.

00:53:39 ◼   ► Yeah.

00:53:41 ◼   ► And then I thought, I presume that Bill Gates doesn't

00:53:45 ◼   ► use an iPhone, that he was-- at least at the time,

00:53:47 ◼   ► because Microsoft was still trying to be a part of,

00:53:52 ◼   ► a provider of mobile phone platforms,

00:53:59 ◼   ► I thought, holy shit, wherever Bill Gates is,

00:54:01 ◼   ► I have a better cell phone than Bill Gates.

00:54:04 ◼   ► There's nothing that he can do,

00:54:06 ◼   ► the richest man in the world who cares about computers,

00:54:09 ◼   ► both of these guys obviously care about computers,

00:54:11 ◼   ► there's nothing they can do, no amount of money

00:54:13 ◼   ► that they can spend to get a better cell phone

00:54:16 ◼   ► than the one I had as a guy who runs Daring Fireball.

00:54:21 ◼   ► And that's sort of the thinking in my mind

00:54:24 ◼   ► behind the analogy to the Coca-Cola thing.

00:54:27 ◼   ► It breaks down so easily because, like I said,

00:54:29 ◼   ► there are billions of people on the planet,

00:54:32 ◼   ► the most, more people on the planet

00:54:34 ◼   ► than there are who can afford an iPhone,

00:54:36 ◼   ► even if they wanted one, who can't,

00:54:37 ◼   ► can't possibly afford one.

00:54:39 ◼   ► So that analogy breaks down.

00:54:42 ◼   ► And the other problem with it, too,

00:54:44 ◼   ► is that even if I'm exactly right

00:54:46 ◼   ► and that the iPhone X or iPhone Pro

00:54:48 ◼   ► or whatever it's gonna be called,

00:54:49 ◼   ► costs, starts at $1,200 and goes to like $1,400 or $1,500

00:54:53 ◼   ► or something like that.

00:54:55 ◼   ► That's not a luxury product.

00:54:57 ◼   ► I mean, it is by some standards,

00:54:59 ◼   ► but it's not like the difference between a Honda

00:55:01 ◼   ► and a Ferrari.

00:55:02 ◼   ► It's more like the difference between a Honda and a Acura

00:55:09 ◼   ► or something like that.

00:55:10 ◼   ► It is not something that's outside.

00:55:12 ◼   ► It might be more than people want to pay,

00:55:14 ◼   ► But most people, a lot of people who can afford a $969 iPhone 7

00:55:20 ◼   ► Plus could, if they so choose, also afford a $1,200 iPhone

00:55:26 ◼   ► Pro.

00:55:26 ◼   ► They just may not be happy about the extra $200 in price.

00:55:29 ◼   ► But it's not like it's trying to ask somebody to buy--

00:55:34 ◼   ► perfect example.

00:55:35 ◼   ► It's not like trying to ask somebody to buy a $20,000 gold

00:55:37 ◼   ► Apple Watch.

00:55:39 ◼   ► No, and I know a lot of people who

00:55:40 ◼   ► buy the Honda instead of the Acura

00:55:41 ◼   ► and then laugh at the person who wasted their money

00:55:43 ◼   ► on the Acura.

00:55:44 ◼   ► I mean, people are funny in all different ways.

00:55:46 ◼   ► Right.

00:55:46 ◼   ► Right.

00:55:49 ◼   ► And there's some people.

00:55:50 ◼   ► And I think that my audience and your audience,

00:55:53 ◼   ► our collective audience, are skewed by the fact

00:55:56 ◼   ► that the whole reason they are our audience

00:55:59 ◼   ► and they're listening to us go on and on about this

00:56:01 ◼   ► is because they care really deeply about this.

00:56:03 ◼   ► And they really know exactly what

00:56:04 ◼   ► the difference is between the iPhone 7 and the iPhone 6S.

00:56:08 ◼   ► And whether they chose to buy one or not,

00:56:10 ◼   ► they know exactly what they're missing out on

00:56:11 ◼   ► if they didn't buy it.

00:56:12 ◼   ► And they know exactly what they're getting

00:56:14 ◼   ► if they do buy it and upgrade from whatever iPhone

00:56:16 ◼   ► that they had, and they're tuned into these rumors,

00:56:18 ◼   ► and they really are excited about the idea of a iPhone

00:56:21 ◼   ► that maybe has an exciting new industrial design.

00:56:24 ◼   ► And they've been basing their hopes on the assumption

00:56:28 ◼   ► that they'll be getting it for six or $700.

00:56:31 ◼   ► - Yeah, totally.

00:56:34 ◼   ► - And I get it.

00:56:36 ◼   ► - I think the hard thing is,

00:56:39 ◼   ► 'cause a lot of the feedback that you and I got

00:56:40 ◼   ► is that why are you not attacking Apple over this?

00:56:43 ◼   ► why are you not standing up for us

00:56:44 ◼   ► and telling Apple this is bad?

00:56:46 ◼   ► - Right.

00:56:47 ◼   ► - And I don't know about you, but my strategy is

00:56:48 ◼   ► when there's rumors about Apple's things,

00:56:49 ◼   ► I wanna understand it first, because nothing exists.

00:56:52 ◼   ► These products have not been announced yet.

00:56:53 ◼   ► Apple's revealed no products, no pricing, nothing.

00:56:56 ◼   ► All we have is speculation,

00:56:57 ◼   ► and I wanna sort of see if it's valid or not,

00:57:00 ◼   ► and the only way I can do that is sort of try to understand,

00:57:02 ◼   ► if Apple is doing this, what world does it make sense?

00:57:05 ◼   ► 'Cause Apple's usually a pretty logical company.

00:57:07 ◼   ► What world does it make sense for Apple to do this?

00:57:09 ◼   ► And I'm not gonna take a position on it yet

00:57:11 ◼   ► because I'm still trying to understand it.

00:57:13 ◼   ► It's sort of like Nielle's famous article

00:57:15 ◼   ► about the headphone jack being user hostile and stupid.

00:57:17 ◼   ► That was written before it launched.

00:57:19 ◼   ► And I think that's a fine article to write

00:57:21 ◼   ► when it's launched because if you write it based on rumors,

00:57:24 ◼   ► Apple's already made that phone.

00:57:25 ◼   ► There's nothing you can do to have them go

00:57:28 ◼   ► and have Phil Schiller to use a little hammer

00:57:29 ◼   ► and knock a headphone jack.

00:57:31 ◼   ► But it doesn't really exist,

00:57:32 ◼   ► so you can try to understand it.

00:57:33 ◼   ► But once it launches, I'll take an opinion

00:57:35 ◼   ► on whether I think it's good or not.

00:57:37 ◼   ► Now I just wanna understand it.

00:57:38 ◼   ► - Right.

00:57:42 ◼   ► I got in even further trouble because the first time

00:57:44 ◼   ► I mentioned this wasn't even in an article devoted to it,

00:57:47 ◼   ► but in a, I forget what I linked to,

00:57:49 ◼   ► but I linked to something and offhandedly,

00:57:52 ◼   ► I tossed out the idea, and I guess I was being slightly,

00:57:55 ◼   ► sensationalist is the wrong term,

00:57:56 ◼   ► 'cause I didn't put it in a headline, it wasn't clickbait,

00:57:59 ◼   ► but I at least wanted to poke the bee's nest.

00:58:03 ◼   ► And I said, you know, what if it just,

00:58:05 ◼   ► what if it starts at 15, what if the starting price

00:58:07 ◼   ► for this new iPhone is $1500?

00:58:10 ◼   ► And I said, and I was saying that I would,

00:58:12 ◼   ► I think that would be a good idea.

00:58:14 ◼   ► Or I would like that.

00:58:15 ◼   ► And when I really thought about it,

00:58:18 ◼   ► I think 1500 is probably too high.

00:58:19 ◼   ► And when I really thought about it,

00:58:21 ◼   ► I came up with 1200 as a starting price.

00:58:23 ◼   ► But I still think that I would like that.

00:58:25 ◼   ► And some people took it the wrong way

00:58:27 ◼   ► of me saying I would like it

00:58:29 ◼   ► because I think I'll be able to afford that

00:58:31 ◼   ► and then I'll have an iPhone that fewer people can afford.

00:58:35 ◼   ► - Yeah, like an elitist thing.

00:58:37 ◼   ► - An elitist thing.

00:58:37 ◼   ► And that is absolutely not the way I look at it.

00:58:40 ◼   ► at all, I really don't.

00:58:42 ◼   ► I actually, and again, the people who have a better argument

00:58:45 ◼   ► or at least demand a more nuanced argument for me,

00:58:49 ◼   ► which I hope I've been able to deliver so far

00:58:50 ◼   ► here on this show, is that analogy to the Coke thing,

00:58:54 ◼   ► which I still stand behind and I still like, right?

00:58:56 ◼   ► I don't say this because I think,

00:59:00 ◼   ► I want a phone that other people can't afford.

00:59:03 ◼   ► I certainly didn't buy the gold Apple Watch.

00:59:09 ◼   ► I bought the stainless steel one, the space black one,

00:59:12 ◼   ► and ultimately regret it.

00:59:14 ◼   ► I actually think the best, I've said this before,

00:59:16 ◼   ► I think the best Apple Watch is the sport models,

00:59:20 ◼   ► or as they don't really call them that anymore,

00:59:22 ◼   ► but like the Nike ones and the ones that,

00:59:26 ◼   ► the ones that are made of aluminum.

00:59:28 ◼   ► I think they're the best ones.

00:59:29 ◼   ► I think they actually have better haptics.

00:59:31 ◼   ► I think that they're actually,

00:59:32 ◼   ► I think that the material that they're made out of

00:59:34 ◼   ► is actually more honest to the product.

00:59:38 ◼   ► The only thing I really like better about the stainless steel ones is that they have

00:59:42 ◼   ► the sapphire front, which is truly scratch-proof.

00:59:48 ◼   ► Like an aluminum one with a sapphire front would be ideal to me.

00:59:54 ◼   ► So it's not elitism.

00:59:56 ◼   ► It's what I hope to go into in the rest of the show, which is that I really think that

01:00:02 ◼   ► current strategy is not sustainable, or at least opens them up to certain risks.

01:00:09 ◼   ► Yeah, I think it's also interesting because there are a few dangers with Apple punditry, and that is

01:00:17 ◼   ► when you have an angry critic yelling at the clouds, Apple gets trained to just dismiss it.

01:00:22 ◼   ► Like people said, "Making a gold-colored iPhone is stupid. It was made fun of on Conan." People

01:00:27 ◼   ► said it was going to be garish. There were so many jokes. And then when it shipped and people actually

01:00:31 ◼   ► saw it, the complaints rapidly turned to, "Why can't I get them? Why didn't Apple make enough?

01:00:35 ◼   ► Why are they jerks?" And AirPods was the same. "These are stupid. Why is Apple making these?

01:00:39 ◼   ► And then it quickly shifted to, "These are terrific. Why can't I get them?"

01:00:43 ◼   ► And Apple, I think that was part of the problem with the touch bar, is that Apple is so used to

01:00:47 ◼   ► people telling them that everything, every rumor is garbage, that they've become desensitized

01:00:51 ◼   ► to legitimate criticism. And that's why I'm very careful about what and when I choose to apply that,

01:00:56 ◼   ► because otherwise it'll be a bunch of people saying, "Oh, this new iPhone is stupid," before

01:01:00 ◼   ► before it ships and Apple go, "Ah, you always say that."

01:01:02 ◼   ► - Yeah, all right, let me take another break here

01:01:03 ◼   ► and thank our next sponsor.

01:01:05 ◼   ► It's Hullo Pillow, H-U-L-L-O, pronounced Hullo.

01:01:10 ◼   ► Have you ever tried a buckwheat pillow?

01:01:13 ◼   ► They are totally different than the fluffy soft pillows

01:01:15 ◼   ► most of us are used to.

01:01:16 ◼   ► They're similar to a bean bag,

01:01:18 ◼   ► which allows you to adjust its shape and thickness.

01:01:22 ◼   ► Kinda heavy, too.

01:01:23 ◼   ► It supports your head and neck how you want it to,

01:01:26 ◼   ► unlike traditional squishy soft pillows,

01:01:28 ◼   ► which collapse under the weight of your head, soft pillows.

01:01:30 ◼   ► Allow your neck to fall on a downward bend,

01:01:34 ◼   ► adding uncomfortable pressure to nerves

01:01:36 ◼   ► and discs and muscles.

01:01:38 ◼   ► Hello pillow really supports your neck,

01:01:40 ◼   ► it supports your head.

01:01:41 ◼   ► And also, and this is important,

01:01:43 ◼   ► we talked about the weather,

01:01:44 ◼   ► it stays cool and dry compared to pillows

01:01:46 ◼   ► filled with feathers or foam.

01:01:50 ◼   ► Most pillows absorb and retain body heat and moisture,

01:01:53 ◼   ► making your pillow feel warm and humid

01:01:54 ◼   ► the longer you lay on it.

01:01:55 ◼   ► Buckwheat tends to breathe better,

01:01:57 ◼   ► No more flipping to the cool side of the pillow.

01:02:00 ◼   ► You don't need to do that.

01:02:01 ◼   ► I can vouch for it.

01:02:03 ◼   ► Again, we have them here.

01:02:04 ◼   ► We're pretty much, the sponsors on this episode

01:02:07 ◼   ► are pretty much the things we sleep on here

01:02:09 ◼   ► in the Gruber household.

01:02:10 ◼   ► The mattress, the pillow.

01:02:13 ◼   ► They sent me some.

01:02:15 ◼   ► We love them.

01:02:16 ◼   ► My wife, this was actually the thing my wife misses

01:02:18 ◼   ► when we travel.

01:02:19 ◼   ► She not so much cares about the mattress,

01:02:21 ◼   ► but really misses the pillow.

01:02:24 ◼   ► She actually, she wants to,

01:02:26 ◼   ► she did this on her own podcast, Just The Tip.

01:02:29 ◼   ► She loved doing the reeds.

01:02:30 ◼   ► I think she made Paul Kvassest do the reeds

01:02:32 ◼   ► for most of the sponsors,

01:02:33 ◼   ► but when they had Hello Pillow as a sponsor,

01:02:34 ◼   ► she insisted on doing it

01:02:35 ◼   ► because she loves this pillow so much.

01:02:38 ◼   ► It's like one of her favorite things.

01:02:39 ◼   ► It does sound weird.

01:02:41 ◼   ► Like you think it's like a bean bag?

01:02:43 ◼   ► That is not like a pillow that I've ever seen anywhere else.

01:02:45 ◼   ► I've never heard of it before.

01:02:47 ◼   ► They sent me one and started sponsoring the show.

01:02:49 ◼   ► It is totally different.

01:02:50 ◼   ► It is not like somehow they've turned a bean bag-like pillow

01:02:53 ◼   ► into something that is light and fluffy

01:02:56 ◼   ► like a feather-filled pillow.

01:02:57 ◼   ► It is totally different.

01:02:58 ◼   ► And you first put your head on it

01:03:01 ◼   ► and you can hear that there's beans in there.

01:03:02 ◼   ► You're like, this is a little weird, I don't know about it.

01:03:05 ◼   ► But then you actually give it a try

01:03:07 ◼   ► and whew, it is different and it is good.

01:03:10 ◼   ► Do you use two pillows or fold one pillow

01:03:14 ◼   ► to get your proper support?

01:03:16 ◼   ► That's what I used to do.

01:03:18 ◼   ► That's a sign that your pillow isn't firm enough

01:03:22 ◼   ► or thick enough.

01:03:23 ◼   ► Hello, pillow.

01:03:23 ◼   ► two pillows. You just have one and it does the job. And you can add or remove fill from

01:03:30 ◼   ► the zippered opening. So if you feel like the one you get has too much, you'd rather

01:03:34 ◼   ► have it have even less support. You just unzip it, take some of the buckwheat things out,

01:03:40 ◼   ► zip it back up, and you're ready to go. Again, this is another product that is made in the

01:03:45 ◼   ► USA with quality construction and materials. And here's the deal. You think, "I just don't

01:03:52 ◼   ► know about this, buying a premium pillow without even feeling it or whatever, they have a 60

01:03:58 ◼   ► night sleep on it guarantee. So you buy it, try it for 60 days, and again, if you don't

01:04:03 ◼   ► like it, send it back. They'll take it for free and give you a full refund. You cannot

01:04:07 ◼   ► lose. So if you're in any way dissatisfied with your current pillows, if you've got like

01:04:11 ◼   ► a crick in your neck or just a crick in your neck every once in a while just from sleeping,

01:04:15 ◼   ► give them a try. It's a great product. Really do sleep on it. I sleep on one every night.

01:04:19 ◼   ► My wife does too.

01:04:20 ◼   ► I wouldn't say it if it weren't true.

01:04:23 ◼   ► HelloPillow.com/talkshow is where you go to find out more.

01:04:28 ◼   ► That's H-U-L-L-O, pillow, P-I-L-L-O-W.com/talkshow.

01:04:34 ◼   ► And if you try more than one pillow, you get a discount of up to 20 bucks per pillow, depending

01:04:39 ◼   ► on the size.

01:04:41 ◼   ► Fast free shipping on every order too.

01:04:43 ◼   ► And last but not least, 1% of all of Hello Pillow's profits are donated to the Nature

01:04:49 ◼   ► Conservancy. Great company, great product, and if you get more than one pillow, you'll get a

01:04:54 ◼   ► tremendous discount, 20 bucks, up to 20 bucks per pillow. So try them out at hello pillow.com/talkshow.

01:05:01 ◼   ► So we're talking about this idea of what if, what if there's this new fancy OLED phone is a higher

01:05:10 ◼   ► end, new tier. I don't think, and I wrote, I tried to emphasize this, I just don't think it's getting

01:05:17 ◼   ► through people's heads, some people, just how unbelievably

01:05:24 ◼   ► difficult it is for Apple to produce iPhones at the scale

01:05:29 ◼   ► that they produce every year.

01:05:30 ◼   ► I think last year they sold around 70 million iPhones

01:05:33 ◼   ► in the first quarter that the iPhone 7 and 7 Plus went

01:05:36 ◼   ► on sale.

01:05:37 ◼   ► And just by looking at average selling prices,

01:05:39 ◼   ► which is what they-- they don't break down unit sales.

01:05:42 ◼   ► I mean, Apple is a little bit more

01:05:43 ◼   ► forthcoming with iPhone sales than--

01:05:45 ◼   ► They're more forthcoming than any other company

01:05:48 ◼   ► in the phone business.

01:05:49 ◼   ► And they're more forthcoming than they are

01:05:51 ◼   ► with Apple Watch and stuff like that.

01:05:54 ◼   ► But they don't break down by model.

01:05:56 ◼   ► They give some hints in the quarterly finance calls.

01:06:00 ◼   ► Like we learned last year that they underestimated

01:06:05 ◼   ► the demand for the 7 Plus.

01:06:08 ◼   ► Yes.

01:06:09 ◼   ► And that touches back on what I said earlier,

01:06:12 ◼   ► which is that Apple is not,

01:06:13 ◼   ► they don't have a perfect forecast for these things.

01:06:15 ◼   ► - No, their demand forecasting has been like the SE,

01:06:18 ◼   ► the Undimated Later Estimated Demand for the smaller phone.

01:06:20 ◼   ► It's been a few of those.

01:06:21 ◼   ► - Yeah, the SE, really, I think they were way off.

01:06:26 ◼   ► You would think that that would be one of the easier

01:06:30 ◼   ► to produce devices, 'cause the form factor was the same

01:06:32 ◼   ► as the 5S, and it was using the then

01:06:36 ◼   ► six-month-old system on a chip.

01:06:40 ◼   ► And instead, they so vastly underestimated it

01:06:44 ◼   ► that they was behind for months before they--

01:06:46 ◼   ► - The rumor was that they thought people would buy it

01:06:48 ◼   ► because it was less expensive

01:06:49 ◼   ► and they didn't realize how many would buy it

01:06:50 ◼   ► simply because it was smaller.

01:06:51 ◼   ► - Yep, exactly.

01:06:53 ◼   ► And everybody I know who has one bought it

01:06:54 ◼   ► because it's smaller.

01:06:55 ◼   ► I have a ton of friends who own and love the SE

01:07:00 ◼   ► simply because it's smaller.

01:07:02 ◼   ► - Yep.

01:07:03 ◼   ► And especially because the 7 Plus was more expensive

01:07:07 ◼   ► than the previous Plus phones have been.

01:07:08 ◼   ► I think it was 20 bucks more.

01:07:10 ◼   ► And they thought maybe that would dampen enthusiasm for it,

01:07:12 ◼   ► but instead the dual camera system was enough.

01:07:14 ◼   ► And I think that was too late

01:07:16 ◼   ► to sort of change their thinking on this,

01:07:18 ◼   ► but if they did have any reservations

01:07:19 ◼   ► about whether they could test the upward price elasticity,

01:07:22 ◼   ► I think that quickly evaporated them.

01:07:23 ◼   ► - Yeah, and I think that that term price elasticity

01:07:28 ◼   ► is an important one to think about,

01:07:29 ◼   ► which is that Apple has not really tested it.

01:07:32 ◼   ► I mean, they've sort of tested it slightly

01:07:34 ◼   ► with the first plus models,

01:07:36 ◼   ► and they tested it even more last year

01:07:40 ◼   ► by adding $20 to the cost of the Plus models

01:07:43 ◼   ► and having a very compelling, I think.

01:07:46 ◼   ► I think in hindsight, the dual camera system

01:07:50 ◼   ► is a very big selling point.

01:07:52 ◼   ► I think enough people, casual users of the iPhone,

01:07:56 ◼   ► see it as-- whether they think of it that way or not,

01:07:59 ◼   ► they probably think of it as a communications device first,

01:08:02 ◼   ► texting and messaging and reading web pages

01:08:07 ◼   ► and the stuff you do.

01:08:08 ◼   ► Everybody does.

01:08:09 ◼   ► and I think as a camera second.

01:08:11 ◼   ► And I think being able to take better photos,

01:08:14 ◼   ► in some cases noticeably better photos, right?

01:08:18 ◼   ► And in a worse case, exactly equal to the iPhone 7, right?

01:08:22 ◼   ► If you're using the wider angle lens,

01:08:26 ◼   ► in most conditions, the worse you're going to do

01:08:28 ◼   ► is get the exact same photo you'd gotten on the iPhone 7.

01:08:32 ◼   ► And in other cases, like with portrait mode,

01:08:34 ◼   ► when portrait mode works, it is unbelievable.

01:08:36 ◼   ► It really is, in my opinion.

01:08:39 ◼   ► - It's emotional.

01:08:41 ◼   ► - Right, I just can't believe it came from a phone.

01:08:43 ◼   ► I really can't.

01:08:44 ◼   ► As somebody who still shoots a lot of photos

01:08:47 ◼   ► using quote unquote real cameras,

01:08:49 ◼   ► before we went on vacation, we had a family wedding.

01:08:54 ◼   ► And it was down in South Carolina,

01:08:59 ◼   ► and the family rented a beach house for people to stay at

01:09:03 ◼   ► for a couple of days because it's a lot of family

01:09:05 ◼   ► who doesn't get to see each other regularly,

01:09:07 ◼   ► people from all over the place.

01:09:09 ◼   ► So I took my Fuji X100S and shot a whole bunch of photos there.

01:09:14 ◼   ► And there were some of them where--

01:09:16 ◼   ► and I would just as a test, because I'm a nerd.

01:09:18 ◼   ► Even when I'm at a family outing like that,

01:09:20 ◼   ► I'm doing stuff like this where I'm taking

01:09:22 ◼   ► a photo with the X100S, and I quick take out my iPhone

01:09:25 ◼   ► and take the exact same photo, and then later go back and look

01:09:28 ◼   ► at it on a big screen and see what the difference is.

01:09:31 ◼   ► And I could see it.

01:09:32 ◼   ► There were some cases where I took a photo.

01:09:34 ◼   ► I was like, wow, this is why it's worth it.

01:09:36 ◼   ► Don't be a dummy and never take your X100S out with you.

01:09:39 ◼   ► Sometimes you really, if it's an event like that, do it.

01:09:42 ◼   ► But then I also, I still have the RED 7 Plus review unit.

01:09:49 ◼   ► When the RED phone came out,

01:09:50 ◼   ► Apple sent me a review unit for that.

01:09:52 ◼   ► Probably around that time I should send it back,

01:09:55 ◼   ► but I still had it.

01:09:57 ◼   ► And I took some photos with that when I was on vacation.

01:10:00 ◼   ► And some of the portrait mode photos,

01:10:01 ◼   ► I cannot believe that they were from a phone.

01:10:03 ◼   ► That they gave me the same feeling I got

01:10:05 ◼   ► when I looked at the photos from the X100S

01:10:07 ◼   ► compared to the same photo on the 7.

01:10:08 ◼   ► And just in terms of,

01:10:10 ◼   ► it's not just the trickery of having a blurred out background

01:10:15 ◼   ► it's just, like you said, it's like an emotional truth

01:10:18 ◼   ► to the photo that isn't there.

01:10:20 ◼   ► So it's compelling.

01:10:21 ◼   ► - iOS 11's even better at it in their lower light

01:10:23 ◼   ► so they're just working,

01:10:24 ◼   ► they're continuing to improve it through software

01:10:26 ◼   ► which you can't do on a normal camera.

01:10:28 ◼   ► - Right, and that's before they tell us

01:10:29 ◼   ► about whatever improvements they've made

01:10:31 ◼   ► to dual camera hardware technology, right.

01:10:33 ◼   ► that for 7+ users, iOS 11 is going

01:10:37 ◼   ► to be a significant camera update.

01:10:38 ◼   ► It's pretty exciting.

01:10:40 ◼   ► So I think what happened in hindsight with demand

01:10:46 ◼   ► was that so many people were waiting for a big iPhone,

01:10:51 ◼   ► quote unquote, "big one," that the iPhone 6+ was more

01:10:54 ◼   ► popular than they expected, because they

01:10:56 ◼   ► knew there was pent-up demand.

01:10:57 ◼   ► Famously, it came out in the Samsung emails

01:11:00 ◼   ► that had to be released during the Samsung lawsuit, where

01:11:05 ◼   ► there was a slide presentation that before iPhone--

01:11:07 ◼   ► I think around 2013 or so-- that the quote was--

01:11:10 ◼   ► this is from an Apple internal presentation--

01:11:12 ◼   ► consumers want what we don't have, bigger phones.

01:11:16 ◼   ► So they knew that.

01:11:16 ◼   ► They knew that.

01:11:17 ◼   ► And I think even they underestimated it.

01:11:20 ◼   ► And then I think with the 6S, they were like, well,

01:11:24 ◼   ► these Plus phones are super--

01:11:26 ◼   ► we underestimated them.

01:11:27 ◼   ► We'll make more of them.

01:11:28 ◼   ► and then with the 6S Plus, it was a little bit,

01:11:31 ◼   ► they overshot demand for that.

01:11:33 ◼   ► And then with the 7, I think they went back to,

01:11:36 ◼   ► well, I think the 6 just, you know,

01:11:38 ◼   ► 6 Plus was popular just 'cause there was pent-up demand,

01:11:41 ◼   ► so we'll decrease it this time.

01:11:42 ◼   ► And I think they underestimated just how compelling

01:11:44 ◼   ► the dual camera was going to be.

01:11:46 ◼   ► - Yeah, again, yeah, it wasn't about the size,

01:11:48 ◼   ► it was about the camera.

01:11:49 ◼   ► - Right, but moving the upper price all the way to 969

01:11:53 ◼   ► is certainly starting to stretch,

01:11:55 ◼   ► to test the limits of pricey elasticity.

01:11:59 ◼   ► But anyway, even with the plus ones though,

01:12:03 ◼   ► they still have to make them in massive quantities,

01:12:05 ◼   ► truly massive, tens of millions per quarter quantities.

01:12:09 ◼   ► - And it's a, people have talked before

01:12:12 ◼   ► about how it's a miracle that Windows boots up

01:12:13 ◼   ► on as much hardware as it does every time,

01:12:15 ◼   ► and it's become an equal miracle

01:12:16 ◼   ► that Apple can get every single component

01:12:18 ◼   ► of the 100 million iPhones they need to produce ready

01:12:21 ◼   ► by the same sort of September deadline every year.

01:12:23 ◼   ► - Right, yeah, it's unbelievable.

01:12:25 ◼   ► And I think, you know, and there's been a lot of stuff

01:12:29 ◼   ► recently because we just passed the 10-year anniversary

01:12:32 ◼   ► of the original iPhone shipping to consumers.

01:12:34 ◼   ► I think people forget just how much the original iPhone

01:12:38 ◼   ► was a sort of, we can't make many of these sort of device.

01:12:43 ◼   ► You know, I think Apple famously, Steve Jobs said famously

01:12:47 ◼   ► that they were hoping to sell 10 million iPhones

01:12:49 ◼   ► by the end of the next year.

01:12:51 ◼   ► So in other words, like in the first 18 months

01:12:53 ◼   ► that it was on sale, they wanted to sell 10 million phones.

01:12:58 ◼   ► And they surpassed that, but not by much.

01:13:00 ◼   ► It was a pretty good ballpark estimate.

01:13:04 ◼   ► And now, of course, they sell 200 to 300 million per year.

01:13:08 ◼   ► But they couldn't have sold-- it makes sense.

01:13:11 ◼   ► It's one of those jumping the chasm marketing things,

01:13:14 ◼   ► where obviously the first iPhone,

01:13:16 ◼   ► no matter how much consumer awareness there was,

01:13:19 ◼   ► and no matter how much goodwill and how many happy iPod users

01:13:22 ◼   ► they had out there, the idea of buying a $600 or $700 phone

01:13:28 ◼   ► and the idea of buying something with this all new touchscreen

01:13:33 ◼   ► technology where there's no hardware button to make

01:13:36 ◼   ► a phone call or to hang up or no hardware keypad to dial

01:13:40 ◼   ► phone numbers was the sort of thing that-- of course,

01:13:44 ◼   ► it was going to take a couple of years for the mass market

01:13:47 ◼   ► to move there.

01:13:48 ◼   ► But even if somehow magically there

01:13:50 ◼   ► had been demand for 100 million iPhones in that first year,

01:13:54 ◼   ► Apple couldn't have made them.

01:13:55 ◼   ► There's no way they could have made them.

01:13:57 ◼   ► They were on one carrier in one country,

01:13:58 ◼   ► and even then, it was only people

01:14:00 ◼   ► who were not on a contract who were

01:14:02 ◼   ► willing to break their contract to get it

01:14:03 ◼   ► that they had to sort of service.

01:14:05 ◼   ► Right.

01:14:05 ◼   ► So to me, it makes sense.

01:14:10 ◼   ► I can't think of any other product that's

01:14:11 ◼   ► quite like the iPhone, where the best selling market--

01:14:15 ◼   ► or best selling product is the highest tiered one,

01:14:19 ◼   ► year after year after year.

01:14:20 ◼   ► And it's been fantastic for Apple financially.

01:14:26 ◼   ► And it's been exciting for consumers

01:14:28 ◼   ► in so far as that they can, you know,

01:14:30 ◼   ► you can always go in and every time,

01:14:32 ◼   ► whether you upgrade every year or two years

01:14:34 ◼   ► or every three years, you can go in

01:14:35 ◼   ► and for the same price get the quote best iPhone.

01:14:39 ◼   ► It's, I don't think it's sustainable

01:14:42 ◼   ► at the quantities that they've reached at this point.

01:14:46 ◼   ► - No, and it's also not a,

01:14:47 ◼   ► Like one of the biggest challenges Apple's had

01:14:49 ◼   ► in the market is growth.

01:14:50 ◼   ► It doesn't matter how much you've sold,

01:14:51 ◼   ► it matters how much more you are going to sell.

01:14:54 ◼   ► And eventually they'll get to the point

01:14:55 ◼   ► where there's just every human who wants an iPhone has one

01:14:57 ◼   ► and there's no Apple stores on Mars.

01:14:58 ◼   ► So you have to start adding other markets.

01:15:01 ◼   ► Well, you literally do, you have to start adding

01:15:02 ◼   ► other markets and they did that.

01:15:03 ◼   ► They were like, everyone who was willing,

01:15:05 ◼   ► who was on AT&T or willing to switch to AT&T has an iPhone.

01:15:07 ◼   ► So we have to add Verizon and international carriers.

01:15:10 ◼   ► And then everyone had those, finally they got China Mobile.

01:15:13 ◼   ► So the easy growth steps by just simply adding

01:15:15 ◼   ► more territories were done.

01:15:17 ◼   ► And then it was everybody who was willing to have

01:15:19 ◼   ► an under four inch phone had one.

01:15:22 ◼   ► And if they wanted to grow the market,

01:15:23 ◼   ► they had to add an over four inch phone

01:15:25 ◼   ► because that's the only part of the market

01:15:26 ◼   ► that Samsung was actually dominating

01:15:28 ◼   ► was the premium phone market over four inches in size.

01:15:31 ◼   ► So they added 4.5 and five, sorry, 4.7 and 5.5.

01:15:34 ◼   ► And then those people bought iPhones.

01:15:36 ◼   ► And then it was, well, are we leaving space underneath this?

01:15:38 ◼   ► Are we creating an umbrella?

01:15:40 ◼   ► We can't keep addressing it with things like the last phone.

01:15:42 ◼   ► Can we make a phone that appeals,

01:15:44 ◼   ► That's like a TV show, not like a big blockbuster movie,

01:15:46 ◼   ► but that's like a TV show and people will buy it

01:15:48 ◼   ► and it's less expensive.

01:15:49 ◼   ► And maybe it was the wrong product

01:15:50 ◼   ► or maybe that's not a good market for Apple

01:15:52 ◼   ► or whatever reason, it didn't work,

01:15:54 ◼   ► but there's still other questions.

01:15:55 ◼   ► Can we grow the market by creating a premium tier

01:15:58 ◼   ► where people would love the iPhone so much

01:16:01 ◼   ► they're willing to buy more iPhone from us?

01:16:03 ◼   ► And all you can do in business is annex

01:16:05 ◼   ► the next nearest neighbor market,

01:16:06 ◼   ► and that's sort of what Apple has been strategically doing.

01:16:08 ◼   ► - Yeah.

01:16:09 ◼   ► I also think it's risky for them not to try it.

01:16:14 ◼   ► And Samsung is obviously their biggest rival

01:16:18 ◼   ► and it's in terms of quantity and in terms of,

01:16:21 ◼   ► it's no mistake that that's where

01:16:23 ◼   ► the Wall Street Journal's article about who's taken

01:16:26 ◼   ► the design crown from Apple is that it's Samsung.

01:16:28 ◼   ► I don't think that Apple can count on that though.

01:16:35 ◼   ► Can't count on Samsung not making a better leap.

01:16:38 ◼   ► Can't count on some other company making a dent.

01:16:41 ◼   ► It would be foolish.

01:16:43 ◼   ► The Pixel is a very nice phone.

01:16:45 ◼   ► I've actually had it out in the last few days

01:16:48 ◼   ► because I've been mostly on Twitter writing about-- I

01:16:51 ◼   ► don't know if we'll get to it on the show--

01:16:53 ◼   ► but changes to the iOS 11 notification center

01:16:57 ◼   ► that I don't like compared to iOS 10

01:16:59 ◼   ► and comparing it to the latest and greatest on Android

01:17:02 ◼   ► where some-- long been held by some people

01:17:05 ◼   ► that Android has a better-- whatever you think of Android

01:17:07 ◼   ► versus iOS overall-- that Android has a better

01:17:09 ◼   ► notification UI, which I kind of disagree with, especially

01:17:13 ◼   ► compared to iOS 10, but I'm not sure I disagree with it

01:17:15 ◼   ► compared to iOS 11. - They're both worse

01:17:16 ◼   ► than WebOS, we all know that.

01:17:18 ◼   ► - Yeah, that's true, it's absolutely true.

01:17:20 ◼   ► I've been thinking about WebOS and the Palm a lot too

01:17:23 ◼   ► in this iPhone 10 year nostalgia.

01:17:28 ◼   ► My God, my biggest regret is that Palm didn't make it,

01:17:33 ◼   ► or that somebody didn't, somebody like Microsoft,

01:17:36 ◼   ► like instead of wasting all that money on Nokia,

01:17:38 ◼   ► what if they bought Palm instead,

01:17:39 ◼   ► and just thrown money at the hardware

01:17:42 ◼   ► to get it to go fast enough to make that work.

01:17:46 ◼   ► That's my deepest regret, 'cause man,

01:17:49 ◼   ► that was, that's the only other UI that I ever liked,

01:17:54 ◼   ► really liked overall, and in some ways,

01:17:58 ◼   ► I really did like it better than the iPhone OS.

01:18:01 ◼   ► Anyway, that's a long digression.

01:18:03 ◼   ► - There's a lot of things, right, yes.

01:18:04 ◼   ► - There were enough former Apple people at Palm

01:18:06 ◼   ► that it made sense, but the gist of my reaction,

01:18:11 ◼   ► My overall take to WebOS was that WebOS was a more

01:18:16 ◼   ► Apple-y product, historically.

01:18:18 ◼   ► If you look at the heyday of the original Mac,

01:18:21 ◼   ► like that 1985 through 1995, '96, the best of Apple design,

01:18:28 ◼   ► and the sort of thinking that made the Newton great,

01:18:32 ◼   ► and it really made the original--

01:18:34 ◼   ► when the classic Mac OS had the biggest advantage UI-wise

01:18:38 ◼   ► over Windows and everything else,

01:18:40 ◼   ► that a lot of the sentiment that made it great then

01:18:43 ◼   ► was in webOS.

01:18:44 ◼   ► And not in ways, not that iOS was bad in any of those ways,

01:18:48 ◼   ► but it was sort of like it overlooked some of it.

01:18:51 ◼   ► Like the notification, the way that notifications in webOS

01:18:55 ◼   ► were years ahead of iOS and very, very elegant,

01:18:59 ◼   ► it's a different problem that's being solved,

01:19:01 ◼   ► but it reminds me of the control strip in classic Mac OS,

01:19:04 ◼   ► which was still to me, every time I sit here and fiddle

01:19:07 ◼   ► with these stupid little icons,

01:19:09 ◼   ► menu bar icons on Mac OS X, it just pains me to think of how nicely the classic Mac OS solved

01:19:18 ◼   ► that problem of wanting to have persistent little icons for adjusting things without cluttering the

01:19:24 ◼   ► freaking menu bar, which should really be for menus. But anyway, I digress. It's a very good

01:19:32 ◼   ► digression. But anyway, I've got the Pixel here, and I've been using it—I hadn't used it for

01:19:37 ◼   ► for, I don't know, I could tell by some of my notifications,

01:19:41 ◼   ► I hadn't used it for like 20 weeks.

01:19:43 ◼   ► It's a nice phone.

01:19:46 ◼   ► - I gave mine to Serenity, she was just in town

01:19:48 ◼   ► and she wanted to try it, so mine is currently on loan

01:19:49 ◼   ► as Serenity calls will.

01:19:50 ◼   ► - It's a nice phone, it's way better than any Android phone

01:19:54 ◼   ► I've ever seen before, and the combination of hardware

01:19:57 ◼   ► and software, I still like way more than any Samsung phone.

01:19:59 ◼   ► I just can't stand the Samsung UI Chrome

01:20:04 ◼   ► that they insist on adding to their phones.

01:20:06 ◼   ► no matter how nice the S8 looks,

01:20:09 ◼   ► without thinking about the software.

01:20:12 ◼   ► But it's, you know,

01:20:15 ◼   ► there, it's, I repeat myself,

01:20:20 ◼   ► but I cannot believe how much criticism the iPhone 7

01:20:23 ◼   ► got last year for looking quote unquote just like

01:20:26 ◼   ► the iPhone 6 and 6S when the Google Pixel

01:20:32 ◼   ► looks exactly like an iPhone 6.

01:20:34 ◼   ► - It got created on a curve.

01:20:35 ◼   ► - Right, it's one of the greatest curves I've ever seen,

01:20:39 ◼   ► grading curves I've ever seen in my life.

01:20:40 ◼   ► - And this was apparently a rush job,

01:20:42 ◼   ► like they couldn't get the hardware they wanted,

01:20:43 ◼   ► so they just got HTC to put this together for them.

01:20:45 ◼   ► So hopefully we get a better pixel this year.

01:20:47 ◼   ► - Well, and it's particularly inexplicable in so far

01:20:49 ◼   ► is that it has the exact same proportioned chin and forehead

01:20:53 ◼   ► as the iPhone 7, and, okay, uses the forehead

01:20:58 ◼   ► for the same purposes as the iPhone to have a speaker grill

01:21:01 ◼   ► and front-facing cameras and other sensors,

01:21:04 ◼   ► but then has the chin that literally has nothing.

01:21:08 ◼   ► It doesn't have a--

01:21:08 ◼   ► A pretty empty, barren chin.

01:21:09 ◼   ► Has no button, has no sensor for your fingerprint,

01:21:12 ◼   ► has no soft buttons.

01:21:14 ◼   ► Yeah.

01:21:15 ◼   ► So anyway, but you can't count--

01:21:17 ◼   ► Got antenna lines and an antenna window.

01:21:19 ◼   ► It's very confusing.

01:21:20 ◼   ► Look, Google has a ton of money.

01:21:22 ◼   ► And I don't think that they would do it,

01:21:25 ◼   ► what I'm about to say.

01:21:26 ◼   ► But you can't count them out strategically,

01:21:28 ◼   ► that they could come in and design a Pixel phone.

01:21:33 ◼   ► 'Cause they do have liberties with the Pixel line,

01:21:36 ◼   ► 'cause they're not trying to sell 100 million of them.

01:21:38 ◼   ► They know that Samsung is going to sell

01:21:40 ◼   ► the most high-end phones,

01:21:41 ◼   ► and they know that the meaty middle of the Android market

01:21:45 ◼   ► that makes up that chunk that gives them

01:21:47 ◼   ► the overall market share value

01:21:50 ◼   ► is cheap phones around the world,

01:21:52 ◼   ► lower-cost phones around the world

01:21:54 ◼   ► from dozens of different little manufacturers.

01:21:56 ◼   ► So they can do whatever they want with the Pixel brand.

01:21:58 ◼   ► And so I don't think strategically that Apple could

01:22:00 ◼   ► count out the fact that they could build a Pixel super phone

01:22:05 ◼   ► that Apple not couldn't beat because they couldn't do it,

01:22:08 ◼   ► but that they couldn't sell at $200 to $300 million of a year.

01:22:13 ◼   ► Well, that's the rumor.

01:22:14 ◼   ► There's a rumor that the CFO at Google

01:22:16 ◼   ► has taken over a lot of things, which

01:22:17 ◼   ► is why you see so many of the product managers just running

01:22:20 ◼   ► for cover and not releasing a new chat client every three

01:22:24 ◼   ► days anymore.

01:22:25 ◼   ► And one of the things she apparently wants is an iPhone.

01:22:27 ◼   ► And the rumor was this year Pixel 2 would have

01:22:29 ◼   ► like the squeeze sides, like the HTC 11,

01:22:31 ◼   ► where it doesn't have buttons anymore,

01:22:33 ◼   ► or there's a portless prototype apparently,

01:22:35 ◼   ► which is sort of where you hear Apple going

01:22:37 ◼   ► in the future too.

01:22:37 ◼   ► So it sounds very much like that's exactly

01:22:39 ◼   ► what Google wants to do.

01:22:40 ◼   ► - Yeah.

01:22:41 ◼   ► I just feel, so here's a tweet, somebody tweeted us,

01:22:45 ◼   ► 'cause you and I are sort of on the same page with this,

01:22:47 ◼   ► but somebody tweeted to us,

01:22:49 ◼   ► I think you and Renee Ritchie, this is to me,

01:22:54 ◼   ► are understating what a huge gamble this strategy

01:22:57 ◼   ► would be the strategy, meaning Apple introducing

01:22:59 ◼   ► a new super tier of post $1,000 iPhones

01:23:03 ◼   ► that sell in smaller quantity.

01:23:04 ◼   ► There's so much brand power in the new iPhone.

01:23:10 ◼   ► I totally get that.

01:23:11 ◼   ► I totally get that that has been a huge part of the iPhone's

01:23:16 ◼   ► success.

01:23:17 ◼   ► And it is part of the brand that every year you can get excited,

01:23:20 ◼   ► and there's going to be a new iPhone,

01:23:22 ◼   ► and you're going to find out all about it in September.

01:23:24 ◼   ► and you'll be able to place a pre-order,

01:23:26 ◼   ► what, is it three days later?

01:23:30 ◼   ► Do they take the pre-orders?

01:23:31 ◼   ► - Yeah, it's usually the Friday, right, after the event.

01:23:33 ◼   ► - Right, so they have a Tuesday or Wednesday event,

01:23:36 ◼   ► and then on Friday you can place a pre-order,

01:23:38 ◼   ► and the pre-orders will ship in two weeks or something,

01:23:42 ◼   ► or 10 days, and then there's reviews come out

01:23:45 ◼   ► the next Wednesday or something like that

01:23:47 ◼   ► from people who get seated with pre-release hardware,

01:23:49 ◼   ► and there's this whole formula we go through.

01:23:51 ◼   ► Totally get it that that's part of the brand

01:23:54 ◼   ► of the iPhone.

01:23:56 ◼   ► But my big take is that it's risky.

01:23:58 ◼   ► Yes, so it would be risky for them to do this,

01:24:01 ◼   ► because it would be a change, and who knows

01:24:02 ◼   ► how it's going to go over.

01:24:03 ◼   ► And the disaster would be if they think, hey,

01:24:05 ◼   ► we can only make 10 or 20 million

01:24:07 ◼   ► of these super phones in this first quarter.

01:24:09 ◼   ► It goes on sale.

01:24:10 ◼   ► So no matter how popular it is, that's the most we'll get.

01:24:12 ◼   ► But if it really dampens demand for the other iPhones,

01:24:16 ◼   ► that could be a problem.

01:24:17 ◼   ► And they'll sell fewer overall iPhones and worse,

01:24:20 ◼   ► generate fewer, less revenue in profits.

01:24:23 ◼   ► or if it alienates traditional customers,

01:24:25 ◼   ► or they start looking elsewhere, I think is a big risk.

01:24:27 ◼   ► - Right, and I don't think that's a ridiculous idea to have.

01:24:30 ◼   ► I think it's a huge,

01:24:32 ◼   ► I think this is a huge product marketing challenge

01:24:34 ◼   ► in every sense of the word product marketing,

01:24:39 ◼   ► in Apple's way, where, and I've said this before,

01:24:41 ◼   ► and you know this probably even better than I do,

01:24:43 ◼   ► based on some of your sources at Apple,

01:24:45 ◼   ► but people think marketing, and they think,

01:24:47 ◼   ► well, marketers are the people who,

01:24:49 ◼   ► somebody goes out in a company and designs a product,

01:24:52 ◼   ► and they make a product, and then at the end, here it is,

01:24:55 ◼   ► and then they give it to marketing,

01:24:56 ◼   ► and they're like, now sell this.

01:24:57 ◼   ► And then marketing makes a box for it,

01:25:00 ◼   ► and then comes up with an ad campaign,

01:25:02 ◼   ► and it goes out to the world.

01:25:04 ◼   ► And then that's marketing's job.

01:25:05 ◼   ► And there might be, in some companies,

01:25:07 ◼   ► that is how marketing works.

01:25:08 ◼   ► Marketing is told, here's what we're gonna sell,

01:25:10 ◼   ► you come up with a way to sell it.

01:25:12 ◼   ► At Apple, product marketing is involved

01:25:15 ◼   ► at every step of the way of the conception of a product

01:25:19 ◼   ► and the design of the product.

01:25:21 ◼   ► and that the selling points aren't determined

01:25:25 ◼   ► after it's given to them.

01:25:26 ◼   ► The selling points are determined before it's even made.

01:25:29 ◼   ► - Yeah, absolutely.

01:25:31 ◼   ► I mean, they sort of have a, what I love about Apple,

01:25:33 ◼   ► and I think it's one of their best qualities,

01:25:35 ◼   ► is both in hardware and software,

01:25:36 ◼   ► they have features that marketing really wants,

01:25:39 ◼   ► or someone like Johnny Ive really wants.

01:25:40 ◼   ► And I still laugh when people think Johnny Ive

01:25:42 ◼   ► is not connected with Apple,

01:25:42 ◼   ► because all the stuff goes through him.

01:25:45 ◼   ► It gets pitched in, but there's things,

01:25:47 ◼   ► some of the biggest things we've seen in recent years

01:25:49 ◼   ► have been an engineer who came up with an idea

01:25:51 ◼   ► and pitched it to Johnny or pitched it to Craig.

01:25:53 ◼   ► And then it goes through marketing and they figure out,

01:25:55 ◼   ► can we sell this, can this be a flagship feature?

01:25:57 ◼   ► And then everything in Apple lines up behind it.

01:25:59 ◼   ► - Right.

01:26:01 ◼   ► And so this is a huge product marketing challenge,

01:26:04 ◼   ► not in terms of starting a couple of weeks ago

01:26:08 ◼   ► when they start coming up with ad campaigns

01:26:10 ◼   ► for these phones, but in terms of the years-long conception

01:26:14 ◼   ► of the phones that were slated for the end of 2017

01:26:17 ◼   ► to come up with, if you're going to switch

01:26:20 ◼   ► to a new super tier, how do you keep the mass market tier

01:26:25 ◼   ► still popular?

01:26:26 ◼   ► Both in terms of how do you actually,

01:26:28 ◼   ► what features do you actually put in there

01:26:30 ◼   ► and then how do you position them in advertising

01:26:33 ◼   ► and in a keynote and et cetera,

01:26:35 ◼   ► so that people want to buy it.

01:26:37 ◼   ► It's a huge challenge, absolutely.

01:26:39 ◼   ► I think it's the hardest challenge Apple's ever done

01:26:42 ◼   ► since the original iPhone.

01:26:43 ◼   ► I really did. - And they've had

01:26:44 ◼   ► little steps to prepare for this.

01:26:46 ◼   ► Like, we're gonna make two phones this year,

01:26:47 ◼   ► which is different.

01:26:48 ◼   ► Is that gonna have any problems with it?

01:26:50 ◼   ► we're gonna make a less expensive iPhone,

01:26:52 ◼   ► are we gonna bring the average selling price down too much

01:26:54 ◼   ► because people are gravitating towards the 5C

01:26:56 ◼   ► more than they are towards the 5S.

01:26:58 ◼   ► I mean all of those were sort of practice for this,

01:27:01 ◼   ► but none of them had the risk associated with this.

01:27:03 ◼   ► - Right, the risk wasn't there.

01:27:05 ◼   ► Like if, worst case like with the 6 Plus,

01:27:07 ◼   ► let's say that they had, by a factor of 2X,

01:27:11 ◼   ► underestimated just how many people wanted a 5.5 inch phone.

01:27:15 ◼   ► It would've taken them a few quarters

01:27:16 ◼   ► to get into, to get that fixed,

01:27:19 ◼   ► but it wouldn't have sunk them because at least people

01:27:21 ◼   ► would have been shifting towards the more expensive

01:27:23 ◼   ► of the two models.

01:27:25 ◼   ► And it would have been remediable for the next year

01:27:28 ◼   ► because the next year's phones, the 6S and 6S Plus,

01:27:31 ◼   ► wouldn't have to be redesigned,

01:27:32 ◼   ► they would just have to reappropriate

01:27:34 ◼   ► which one's gonna be made in which quantities.

01:27:39 ◼   ► Whereas if this new, if, and again,

01:27:44 ◼   ► I could be wrong about all of this, who knows?

01:27:46 ◼   ► I really do emphasize that.

01:27:47 ◼   ► But if they're introducing a new higher tier iPhone X

01:27:52 ◼   ► with an OLED display, but that even if they buy

01:27:55 ◼   ► every single OLED display that meets their standards

01:27:58 ◼   ► for what they need for this thing to look good,

01:28:01 ◼   ► in the world that they can only make, say,

01:28:03 ◼   ► 15 million of them in the first quarter.

01:28:07 ◼   ► If it, just the mere existence of that phone

01:28:10 ◼   ► means people buy fewer other phones,

01:28:13 ◼   ► even if they're lined up to buy it in later quarters,

01:28:16 ◼   ► but backordered by three months.

01:28:18 ◼   ► That's a problem for Apple financially.

01:28:20 ◼   ► - Yeah, and we saw the reverse of that

01:28:23 ◼   ► when people, sort of iPhone 6 pulled upgrade cycles forward

01:28:27 ◼   ► and people were super happy with it,

01:28:28 ◼   ► but then they paid for that in the 6S quarter.

01:28:31 ◼   ► And those things are very,

01:28:32 ◼   ► the consistency of that is important.

01:28:34 ◼   ► - Right, so I totally, and I think you agree,

01:28:35 ◼   ► but I totally agree it's a risky strategy.

01:28:38 ◼   ► But I also think it is risky to maintain the status quo

01:28:42 ◼   ► where all new iPhones must be producible

01:28:45 ◼   ► 200 to 300 million units per year for roughly $650 to $950.

01:28:52 ◼   ► To both not be able to take advantage of components that

01:28:57 ◼   ► maybe may not be available in hundreds of millions per year,

01:29:00 ◼   ► but only tens of millions per year,

01:29:03 ◼   ► means that they're seeding any of those type of features

01:29:06 ◼   ► to companies that are willing to make high-end phones

01:29:09 ◼   ► in smaller quantities.

01:29:11 ◼   ► And by not testing the post above $1,000 price points,

01:29:20 ◼   ► they're ceding the opportunity to create phones

01:29:23 ◼   ► like that to other companies.

01:29:26 ◼   ► Yeah, and you were right earlier when you said that iPad Pro,

01:29:29 ◼   ► people think about it differently than iPad.

01:29:30 ◼   ► And MacBook Pro, people don't think MacBook Pro

01:29:32 ◼   ► is an elitist thing because I can only afford a MacBook.

01:29:36 ◼   ► But I was joking on Twitter, and I kind of

01:29:38 ◼   ► regret this in hindsight because it

01:29:39 ◼   ► doesn't feel very Canadian.

01:29:39 ◼   ► but I was joking that this is the company

01:29:41 ◼   ► that replaced the iPod Mini with the iPod Nano,

01:29:44 ◼   ► and they take risks to grow,

01:29:46 ◼   ► otherwise you put on your blinders