The Talk Show

00:00:00 ◼   ► This is the talk show with John Gruber. I'm John Gruber your host

00:00:03 ◼   ► My special guest this week is John moltz

00:00:06 ◼   ► You should do that again. Do your Zeldman impression. That's not really a Zelda. I can't do a Zelda an impression, really

00:00:14 ◼   ► I'm sort of just doing a very like what he did is he just instantly and naturally

00:00:18 ◼   ► Did like a very professional introduction right off the top of his head, you know

00:00:24 ◼   ► I can't do it and I don't do impressions and and Zelda has such a great voice my god

00:00:28 ◼   ► I told him at the end of the show, it's like voices on podcasts are like fonts for reading,

00:00:33 ◼   ► and his voice font is just so great. It's got this incredibly rich voice that I do not like.

00:00:42 ◼   ► Yeah, I was going to say, unlike both of us.

00:00:44 ◼   ► You got the big back page column in Mac world this week.

00:00:50 ◼   ► I did.

00:00:51 ◼   ► I think it's new, right?

00:00:54 ◼   ► Yeah.

00:00:55 ◼   ► The February, the February issue.

00:00:59 ◼   ► Which I believe is the latest.

00:01:00 ◼   ► I always get them, I always get them late.

00:01:02 ◼   ► I'm always like the last person to get them for some reason.

00:01:06 ◼   ► And I, and people.

00:01:07 ◼   ► I get confused because I feel like here's, I've got two of them here in front of me and

00:01:11 ◼   ► the covers are very similar.

00:01:13 ◼   ► They're white covers with red Mac world and fonts and they both have pictures of white

00:01:18 ◼   ► iPods on the front.

00:01:21 ◼   ► One of them is February 2013, one of the ones November 2012.

00:01:25 ◼   ► November 2006.

00:01:26 ◼   ► But anyway, it's the February one.

00:01:28 ◼   ► I liked your little blurb on the very nice website where you told people to go to the

00:01:32 ◼   ► newsstand to read it and then you wrote, "Airport?"

00:01:34 ◼   ► Where do people buy magazines?

00:01:36 ◼   ► I don't know.

00:01:37 ◼   ► Where do you?

00:01:38 ◼   ► You used to be – you could buy them everywhere.

00:01:39 ◼   ► Yeah.

00:01:40 ◼   ► It's a funny – it made me laugh though because I did realize that –

00:01:42 ◼   ► I was thinking about that.

00:01:44 ◼   ► I was like thinking – I'm telling people to go out and buy the magazine.

00:01:46 ◼   ► Where the heck are they going to go?

00:01:47 ◼   ► They're going to drive to the airport.

00:01:50 ◼   ► If I didn't have a subscription in that world, I'm not sure where I would go.

00:01:53 ◼   ► Yeah.

00:01:54 ◼   ► Barnes and Noble? I think they still have magazines.

00:01:56 ◼   ► Yeah, I mean those places do, but ours closed. We had a Borders,

00:02:00 ◼   ► and it closed. So in Tacoma, I don't think, I mean,

00:02:04 ◼   ► other than used, we have some great used bookstores, but other than used bookstores, we

00:02:08 ◼   ► can't buy a book. Yeah, there's no used magazine stores.

00:02:12 ◼   ► Maybe there's, I don't know. I think the moment

00:02:16 ◼   ► for that is that. Yeah, right. You don't want to

00:02:20 ◼   ► to go there don't go into those places but the digit it's funny though because

00:02:26 ◼   ► your column on this this the February 2013 issue of Mac and it's not online

00:02:31 ◼   ► yet is that right yeah I always get so confused when I don't even do they even

00:02:34 ◼   ► know what right what goes online right when I don't know what the deal is

00:02:39 ◼   ► frankly I don't think your thing is it online though is it is not no I know I'm

00:02:42 ◼   ► almost positive that it is not I look for it too and and but it's I think they

00:02:47 ◼   ► eventually do that though. It's perfectly timed though because I feel like it's

00:02:52 ◼   ► it that the the headline says it all why Apple drives people crazy and which is

00:02:56 ◼   ► which is what yeah from the last time you were on the show because we were I

00:03:01 ◼   ► asked you about it and I feel like it's really come up again this week all over

00:03:07 ◼   ► the place like I feel like everybody you know I don't know it's like this this

00:03:11 ◼   ► pre earnings because what it's a week from today when Apple's earnings come

00:03:15 ◼   ► Yes, one week from today or Wednesday or was it Wednesday? It's usually a Wednesday or Tuesday or Wednesday, right?

00:03:21 ◼   ► Well, it'll be next next week. Yeah, it's a middle of next week 17th. Yeah sometime next week either Wednesday or Thursday

00:03:28 ◼   ► I think that Apple will do it and I think that's part of it

00:03:31 ◼   ► I think it's partly because we're one week out from their earnings and everybody's piling on but

00:03:35 ◼   ► There is there's like this the the collective

00:03:39 ◼   ► craziness that Apple drives people to

00:03:43 ◼   ► Sanity and stupidity and and just you know turning off of frontal lobes is I get a peak fervor. I feel this week

00:03:51 ◼   ► Maybe I'm just sensitive to it. Maybe it's like once you start looking for it completely, right? I'm just just craziness that are craziness

00:03:58 ◼   ► But I don't want to ask you to do a

00:04:03 ◼   ► Reading of your column, but what what is that? Can you restate it though?

00:04:07 ◼   ► Can you give the gist of it of your argument of what drives what about Apple drives people crazy? Well?

00:04:13 ◼   ► Well, I feel like there's a lot of things, factors,

00:04:18 ◼   ► that go into this.

00:04:19 ◼   ► And I was only able to, because of the size constraints

00:04:23 ◼   ► of the back page, only able to go into some of them.

00:04:27 ◼   ► But a lot of it-- one of the factors I talked about

00:04:32 ◼   ► was this sort of checklist mentality

00:04:34 ◼   ► that people don't understand Apple's product development

00:04:36 ◼   ► process.

00:04:38 ◼   ► And they sort of apply the same view

00:04:42 ◼   ► that they would to any other product category-- Coke, Pepsi,

00:04:47 ◼   ► soda, cars, anything.

00:04:49 ◼   ► And the easiest way to evaluate stuff

00:04:51 ◼   ► is just to have a checklist, which

00:04:52 ◼   ► is kind of what places like Consumer Reports use

00:04:56 ◼   ► and a lot of the technology sites

00:04:58 ◼   ► use to do evaluation of products,

00:05:00 ◼   ► because it's just easier that way.

00:05:01 ◼   ► And so they have this checklist mentality,

00:05:03 ◼   ► and they go down the checklist.

00:05:04 ◼   ► And Apple products often don't-- I mean,

00:05:07 ◼   ► they're not built that way.

00:05:08 ◼   ► They're built for fit and finish and design

00:05:10 ◼   ► and many other factors that don't easily

00:05:12 ◼   ► lend themselves to being evaluated by a checklist

00:05:15 ◼   ► process.

00:05:15 ◼   ► And so these guys go through, and they-- mostly guys--

00:05:19 ◼   ► and they say the Samsung device did better

00:05:24 ◼   ► because it's got a bigger screen, or it's got a projector

00:05:27 ◼   ► in it.

00:05:29 ◼   ► Which is--

00:05:30 ◼   ► That is true.

00:05:31 ◼   ► It is.

00:05:31 ◼   ► There is a phone now with a built-in projector.

00:05:34 ◼   ► Which I think is just utter madness.

00:05:35 ◼   ► But there is something that you can check off on a list,

00:05:39 ◼   ► and Apple will never have a phone with a projector in it.

00:05:42 ◼   ► So they give more checks to the Samsung device,

00:05:47 ◼   ► and Apple's device gets fewer, and so they

00:05:49 ◼   ► say the Samsung device won.

00:05:51 ◼   ► And then what happens is Mac users, Apple fans,

00:05:56 ◼   ► get into the comments and start screaming loudly

00:05:59 ◼   ► that they don't understand what they're a bunch of idiots.

00:06:01 ◼   ► And this starts this sort of feedback loop for insanity,

00:06:05 ◼   ► where these people think that we're all completely unreasonable

00:06:07 ◼   ► because their fully scientific process has determined

00:06:12 ◼   ► that the Samsung device is better.

00:06:14 ◼   ► So therefore, they try and come up with an explanation

00:06:16 ◼   ► for why are we so bent out of shape about this?

00:06:21 ◼   ► And their only explanation that they can come up with

00:06:23 ◼   ► is that it's a religion.

00:06:25 ◼   ► - That's one of my favorites.

00:06:28 ◼   ► And it never gets old.

00:06:30 ◼   ► It never dies. - Apparently, it never dies.

00:06:33 ◼   ► - Well, and part of it too, and it's that the F word,

00:06:37 ◼   ► faithful. The Apple faithful. Or sometimes I still see—I just saw

00:06:42 ◼   ► yesterday, and it's one of those things where I never know whether I should link

00:06:45 ◼   ► to it and throw traffic at this crap just to make a joke or to let it slide.

00:06:50 ◼   ► But I let it slide, but it was an argument. And the gist of it was that

00:06:54 ◼   ► the people who buy Apple—all Apple products—are, you know, the religious

00:07:00 ◼   ► fervor. But they called them the Mac faithful. It's the Mac faithful who are

00:07:04 ◼   ► buying the iPhones and iPads and Macs when, you know, you just—

00:07:09 ◼   ► 35 million a quarter.

00:07:12 ◼   ► I mean, there's 50 million—they're expecting to sell 50 million iPhones in the last three

00:07:17 ◼   ► months alone when they report their numbers next week.

00:07:20 ◼   ► I mean, no matter whether it's a little bit higher or a little bit lower, it's not

00:07:23 ◼   ► going to be too far away from 50 million.

00:07:25 ◼   ► They don't sell 50 million Macs, you know?

00:07:27 ◼   ► It's crazy.

00:07:28 ◼   ► Like, the whole idea that there's an Apple faithful and that's who they sell to is

00:07:32 ◼   ► wrongheaded and nuts, too.

00:07:33 ◼   ► but I think that they still toss around the term

00:07:36 ◼   ► Mac faithful to describe them shows just how burned

00:07:41 ◼   ► into their lizard brains this view of Apple is.

00:07:46 ◼   ► - Yeah.

00:07:49 ◼   ► - You know, I think I was with you the last time,

00:07:51 ◼   ► or I put it in context of like first impressions

00:07:56 ◼   ► in that people's brains like were evolutionarily wired

00:08:00 ◼   ► to make first impression, or not even first impressions,

00:08:02 ◼   ► But initial impressions of people,

00:08:05 ◼   ► and people don't really change that much over time,

00:08:08 ◼   ► and so we're just not wired to change our minds

00:08:11 ◼   ► about somebody or a thing.

00:08:14 ◼   ► And evolutionary, there's no reason to really have

00:08:18 ◼   ► a conception of a corporation, because there weren't any.

00:08:21 ◼   ► But I think our brains are just,

00:08:23 ◼   ► we treat 'em the same way.

00:08:24 ◼   ► We have emotional, the way that you have

00:08:26 ◼   ► an emotional response to a person,

00:08:28 ◼   ► you have an emotional response to companies.

00:08:30 ◼   ► that I think it's an awful lot of people who formed their view of Apple in the 90s

00:08:36 ◼   ► when the company was in trouble and it looked like you could really make

00:08:41 ◼   ► the argument that their basic strategy of controlling the whole experience,

00:08:47 ◼   ► doing the software, doing the hardware, doing things their own way, that you

00:08:52 ◼   ► could, you know, reasonably make a data backed argument then that it was that's

00:08:56 ◼   ► the wrong way to go and that doesn't work. And that the other way, the PC way, the open

00:09:01 ◼   ► way of using, you know, Microsoft's operating system and having a whole ecosystem of crazy,

00:09:07 ◼   ► you know, configurations of hardware, that's the way to go. Well, you could back that up

00:09:11 ◼   ► then. And I feel people burn that into their mind, that Apple is stubborn and wrong and

00:09:17 ◼   ► a niche and designs for twee design aficionados and it's not successful. And that's the way

00:09:25 ◼   ► way it is. And everything that's happened since that seems to poke a hole in that, they

00:09:30 ◼   ► just see that as a fluke.

00:09:32 ◼   ► You know, that the…

00:09:33 ◼   ► Tim Cynova The things will write themselves…

00:09:35 ◼   ► Dave Asprey The fluke that's going to be corrected

00:09:36 ◼   ► any day.

00:09:37 ◼   ► Tim Cynova Things will write themselves… yeah, yeah.

00:09:38 ◼   ► Things will write themselves eventually. I have a cute little phrase for people. I mean,

00:09:40 ◼   ► this kind of thought process, which is people cutting themselves on Occam's razor. Because

00:09:45 ◼   ► they… it's a simple explanation. And usually, you know, they say that simple explanation

00:09:52 ◼   ► is usually the right one. It's not true in all cases, and it's not true in this

00:09:56 ◼   ► case. The idea that the mobile landscape is exactly the same as the PC landscape was in

00:10:04 ◼   ► the '90s is really not the case at all. There are certain similarities, but to say

00:10:12 ◼   ► that it's going to play out exactly the same is just wrong-headed.

00:10:15 ◼   ► Well, and here's the other thing I keep coming back to, and I feel like I should…

00:10:19 ◼   ► This is an idea that I could expand into a pretty good article, maybe.

00:10:23 ◼   ► Hang on, I want to type this down.

00:10:25 ◼   ► I want to get this down so I can steal it from you.

00:10:29 ◼   ► Primarily what people are arguing about today is iOS.

00:10:31 ◼   ► It's phones and the tablet.

00:10:33 ◼   ► And when they say that Apple's going to run into the same problem that they did before,

00:10:36 ◼   ► it's this basic argument that Android is the new Windows and iOS is the new Mac.

00:10:41 ◼   ► what happened to Apple with the Mac against Windows in the 90s is repeating itself now,

00:10:46 ◼   ► but it's Android and Google instead of Microsoft and Windows. And there's a couple of problems

00:10:53 ◼   ► with that. One, Apple back in the 90s with the Mac never, ever, ever had this sort of

00:11:00 ◼   ► success that they have now with iOS in terms of the millions of users and brand awareness.

00:11:08 ◼   ► They didn't have the retail presence because they didn't even have retail stores. There's

00:11:11 ◼   ► many things that are different, right? They were not the world's most profitable company

00:11:14 ◼   ► at some point, you know, when the Mac was at its peak and Windows 95 hadn't come out yet. They

00:11:20 ◼   ► weren't the most, I mean, they were doing better than they were in those dark years of 96, 97, 98,

00:11:25 ◼   ► but they were never the world's most profitable company. They were never the biggest PC seller.

00:11:29 ◼   ► They never had, you know, market share like they have with the iPad and tablets. None of these

00:11:35 ◼   ► things were true. But I would just say, I would push all that aside and just go back and just

00:11:39 ◼   ► revisit the idea that something actually went wrong for Apple in the PC industry.

00:11:44 ◼   ► They did have a couple of bad years, but they had really bad management at that time, right?

00:11:50 ◼   ► Just look at where the Mac is today.

00:11:53 ◼   ► It has 25 or 26 consecutive quarters of outgrowing the PC industry as a whole, right?

00:12:00 ◼   ► And it's very profitable.

00:12:03 ◼   ► Did Apple actually lose the PC wars?

00:12:05 ◼   ► I don't even see the argument of that.

00:12:08 ◼   ► that there – yes, there were a couple of years where things were bad. But in hindsight,

00:12:12 ◼   ► and given the stability that's happened in the last 15 years with the Mac, how can

00:12:18 ◼   ► you argue that they even lost that one?

00:12:19 ◼   ► Tim Cynova If you add the iPad in now, as you consider

00:12:22 ◼   ► that a computer, you can't really say that.

00:12:27 ◼   ► Steven

00:12:27 ◼   ► I think and I think it let's just call the PC industry. Let's let's separate the iPad from it, right?

00:12:32 ◼   ► Let's say that that's post PC and let's say the PC industry is

00:12:35 ◼   ► What we thought let's draw the line at

00:12:38 ◼   ► 2007 and say before the iPhone what we thought of is the PC industry just tops and

00:12:43 ◼   ► laptops running Windows or Mac or Linux and

00:12:47 ◼   ► You know keyboards and mice and pointers that that type of thing

00:12:52 ◼   ► I would guess that if you separated out Apple's profits, I mean in fact I don't even think

00:12:58 ◼   ► I have to guess. I'm almost certain that Microsoft is still the most profitable PC

00:13:04 ◼   ► company. That Microsoft makes more profits from what that definition I just made of PCs

00:13:11 ◼   ► than Apple. And maybe Intel makes the second most, I don't know. But Apple certainly

00:13:17 ◼   ► makes a lot and I'm pretty sure that they make more profit than any other company that

00:13:22 ◼   ► makes PC hardware. That they make more profit on it than HP or any of those companies. It's

00:13:29 ◼   ► certainly a very good business.

00:13:30 ◼   ► Tim Cynova That's interesting that nobody's…

00:13:31 ◼   ► Dave Asprey But yet I feel like there's still this assumption

00:13:33 ◼   ► that Apple screwed the pooch with PCs in the 90s.

00:13:36 ◼   ► Tim Cynova Yeah. It's interesting that nobody's done

00:13:39 ◼   ► that. That you don't see somebody, I mean everybody focuses so much on mobile right

00:13:44 ◼   ► right now that nobody really is having that argument anymore.

00:13:49 ◼   ► No, and I feel like the time to make it is fading too because the PC industry is shrinking.

00:13:56 ◼   ► And now that it's shrinking, I mean, like I kind of misspoke just before going on the

00:14:01 ◼   ► air here. I posted a thing about Apple and why is Apple expected. It was an argument

00:14:06 ◼   ► from some woman that Apple needs to introduce something new. And I just, you know, a brief

00:14:11 ◼   ► piece and I just said well why does Apple need to do something new when they

00:14:14 ◼   ► the things that they've already got are all profitable the Mac iPad and iPhone

00:14:18 ◼   ► all profitable and growing and somebody pointed out that the Mac isn't actually

00:14:21 ◼   ► growing anymore I feel like quarter to quarter sales might even be down a

00:14:25 ◼   ► little bit what I was thinking was that they're still growing it's still

00:14:31 ◼   ► outpacing the in PC industry as a whole it's just that the PC industry as a

00:14:35 ◼   ► whole is starting to shrink so fast that even with the Mac doing well relative to

00:14:40 ◼   ► all other PCs, it's still actually shrinking quarter to quarter. But that's all, it's

00:14:45 ◼   ► actually, you know, it's one of those like nice problems to have because it's all

00:14:49 ◼   ► about the iPad. Because so many fewer laptops are being sold because people are buying iPads.

00:14:54 ◼   ► Right. And I wanted to talk to you about that. I wanted to discuss that as well, that, that,

00:15:00 ◼   ► what you had. Yeah, I was just looking up the Mac unit sales numbers and they're up,

00:15:06 ◼   ► up year over year but just barely yeah it's close it you know it's it would be

00:15:16 ◼   ► tough to say growing anymore but they're still strong and compared to their

00:15:19 ◼   ► historical numbers they are they are they are literally growing it's it's but

00:15:24 ◼   ► they'll have to have a pretty good quarter to be I think they would do it I

00:15:26 ◼   ► think they would do it they are still growing but it's it's not by it's not a

00:15:29 ◼   ► lot it's not no and they maybe maybe these numbers for this last quarter will

00:15:34 ◼   ► be pretty good because they introduced a couple of new, you know, they had new iMacs and…

00:15:39 ◼   ► Steven: They shipped late though. I don't know. I wonder how many…

00:15:42 ◼   ► Steve, off camera, I'm not sure if the 13… I don't know. I guess the 13-inch MacBook

00:15:45 ◼   ► Pro is their best-selling laptop. I don't know.

00:15:48 ◼   ► Steven, off camera Really?

00:15:49 ◼   ► Steve, off camera I would think the Air…

00:15:50 ◼   ► Steve, off camera I would think the Air…

00:15:51 ◼   ► Steve, off camera Or at least you can't get Retina. I don't

00:15:53 ◼   ► know. They might have a really good number…

00:15:55 ◼   ► Steve, off camera Yeah.

00:15:56 ◼   ► Steve, off camera …for Macs. You know, anybody who was holding

00:15:58 ◼   ► out on a new iMac…

00:15:59 ◼   ► Steve, off camera God forbid anybody wait until next week to

00:16:01 ◼   ► find out. We shall…

00:16:02 ◼   ► Steve, off camera Right.

00:16:03 ◼   ► I'll talk about it now.

00:16:04 ◼   ► Maybe it actually won't show up in the quarterly results, though, because like the iMac didn't

00:16:08 ◼   ► ship until the first week of December.

00:16:09 ◼   ► That's the thing I'm thinking.

00:16:10 ◼   ► So maybe they didn't, maybe they were, it wasn't, because it wasn't available the whole

00:16:13 ◼   ► quarter, maybe it'll be this next quarter where we'll see, you know, the spike from

00:16:17 ◼   ► the new introductions.

00:16:18 ◼   ► Yeah.

00:16:19 ◼   ► But the holiday quarter usually does better than, regardless of whether they—

00:16:23 ◼   ► Yeah, because, you know, computers, you know, maybe it's not, it's kind of a big ticket

00:16:26 ◼   ► Christmas gift, but it still is the sort of thing that people will buy and call it a Christmas

00:16:30 ◼   ► gift.

00:16:31 ◼   ► Yeah.

00:16:32 ◼   ► But the thing about that that I think is that it's fine for them to go along for a while

00:16:39 ◼   ► and just try and ride the growth of these existing products.

00:16:42 ◼   ► But eventually, the Apple that we know is more about going into new markets and reinventing

00:16:49 ◼   ► a new market and staking out the high end and scooping up all the profit and leaving

00:16:57 ◼   ► the low end for everybody else.

00:16:59 ◼   ► Right, and I'm certainly not arguing that they never need to introduce something – a

00:17:03 ◼   ► major new disruption.

00:17:05 ◼   ► I just think, though, that it's goofy to say they need it immediately.

00:17:09 ◼   ► And that's the thing – that's the other thing.

00:17:11 ◼   ► There's a big difference between they need a major new disruption eventually versus they

00:17:16 ◼   ► need a major new disruption now, right now.

00:17:19 ◼   ► And that's something else I think I touched on in that column is that there's this myth

00:17:25 ◼   ► that Apple, under Steve Jobs, churned out—and I think we've talked about this before—but

00:17:30 ◼   ► churned out a groundbreaking product pretty much every quarter, which is not at all the

00:17:35 ◼   ► case.

00:17:36 ◼   ► In hindsight, it's gotten to the point where, yeah, every single time the guy came on stage,

00:17:38 ◼   ► he obliterated an industry.

00:17:41 ◼   ► And Tim Cook still hasn't done it.

00:17:43 ◼   ► Right.

00:17:44 ◼   ► And it's been a whole year, and Tim Cook still hasn't done it.

00:17:46 ◼   ► But you could say the iMac was groundbreaking, I guess, even though the operating system

00:17:54 ◼   ► was exactly the same as the previous operating system. So they did the iMac, they did the

00:17:59 ◼   ► iPod three years later, and then they did the iPhone six years after the iPod. Something

00:18:12 ◼   ► like that.

00:18:13 ◼   ► Right, which is way longer than the scope of period we're looking at right now from

00:18:17 ◼   ► need, you know, everybody points to the original iPad in 2010.

00:18:22 ◼   ► So that's, we're coming close to about three years.

00:18:27 ◼   ► But we still haven't even hit.

00:18:28 ◼   ► Which would be the bare minimum for coming up with something new.

00:18:33 ◼   ► Right.

00:18:34 ◼   ► So, and as somebody, one of the things I linked to recently said, I think it was this piece

00:18:38 ◼   ► from Harvard Business Review by Dan Palata, who made the exact same point you just did,

00:18:43 ◼   ► they went six years without a disruption under Steve Jobs between the iPod and

00:18:49 ◼   ► iPhone is that when the iPad came out which everybody now hails as the thing

00:18:55 ◼   ► that they need to do something like that again a lot of these same people said

00:18:59 ◼   ► that it's just a big iPod just a big iPhone that they didn't even count it

00:19:03 ◼   ► when it appeared yeah that's usually the hallmark I mean the iPhone is the the

00:19:11 ◼   ► the exception. I've often said this, that it's like the holy grail of Apple introductions,

00:19:16 ◼   ► because it was the one that blew everybody away. It blew me away, you know, I'm assuming

00:19:23 ◼   ► it blew you away. It blew the people who get Apple away, and it blew the people who don't

00:19:27 ◼   ► get Apple away. Everybody, even the people who don't understand the company, were like,

00:19:30 ◼   ► "Well, wow, that's a thing." That's amazing. Why can't you do that every time?

00:19:34 ◼   ► And that was my first Macworld, was that one.

00:19:38 ◼   ► And I remember, I think I was sitting,

00:19:41 ◼   ► I might have been sitting next to Glenn.

00:19:43 ◼   ► Yeah, right, I might have been sitting

00:19:44 ◼   ► next to Glenn Fleishman at the time,

00:19:45 ◼   ► and I thought, are they all like this?

00:19:47 ◼   ► This is amazing.

00:19:49 ◼   ► - That was the one where everybody recognized it.

00:19:56 ◼   ► But all the other ones usually are met,

00:19:58 ◼   ► like it's a good sign that Apple's onto something

00:20:00 ◼   ► if it's greeted with a collective meh.

00:20:04 ◼   ► Yeah, yeah, right.

00:20:06 ◼   ► It's getting—I kind of pity the guy because I feel like it's going to go on his tombstone,

00:20:10 ◼   ► but Commander Taco's famous Slashdot reaction to the original iPod. What was it?

00:20:16 ◼   ► Apple releases iPod. This is from Slashdot on October 23, 2001.

00:20:21 ◼   ► And here's what Commander Taco wrote. "No wireless, less space than a nomad. Lame."

00:20:26 ◼   ► Nomad.

00:20:28 ◼   ► It's even better than I remember. Lame.

00:20:31 ◼   ► Also, he didn't capitalize Nomad.

00:20:36 ◼   ► I feel like there's a sort of disdain to that.

00:20:41 ◼   ► Did you have an MP3 player before the iPod?

00:20:46 ◼   ► Yes, I did not.

00:20:49 ◼   ► Amy did.

00:20:50 ◼   ► Amy had a Rio something or another.

00:20:54 ◼   ► was a flash-based jobbie and it held 10 songs, 11 if you picked the right song.

00:21:02 ◼   ► So it was cool in the sense that if you were used to the song restrictions of a CD or a tape,

00:21:15 ◼   ► where you could have about one album worth, you could do it. And it was this device that was way

00:21:20 ◼   ► lighter than the spinning disc player and smaller and never had to worry about jostling

00:21:28 ◼   ► it and having it skip or something like that. But in hindsight, it was a collective pain

00:21:34 ◼   ► in the ass where if you're sick of the 10 songs that were on it, you had to connect

00:21:37 ◼   ► it to your Mac. I think it used SoundJam. SoundJam was what she used to manage music.

00:21:43 ◼   ► Tim Cynova Right. That's what I did too. At the time,

00:21:45 ◼   ► I got it just before going to Tokyo. My wife and I spent three months in Tokyo and it was

00:21:50 ◼   ► working there and it was actually,

00:21:53 ◼   ► I mean for me it was pretty good

00:21:55 ◼   ► because it was like a shuffle.

00:21:57 ◼   ► It was like an iPod shuffle because you just load it up

00:22:00 ◼   ► with a few songs, obviously more size constraint.

00:22:05 ◼   ► But I had like a 20 minute commute and it was perfect.

00:22:10 ◼   ► But you know.

00:22:14 ◼   ► - It was funny, the interface was so bad

00:22:17 ◼   ► that I really do think, no joke,

00:22:19 ◼   ► It was harder to find a specific song, even though there were only 10 or 11 songs total,

00:22:24 ◼   ► than on an iPod that you might have loaded up with thousands.

00:22:27 ◼   ► It was useless.

00:22:28 ◼   ► I mean, the interface for it was useless, which is something that Apple rightly recognized.

00:22:32 ◼   ► There's no point in having the screen on there.

00:22:34 ◼   ► You know what the songs are.

00:22:36 ◼   ► Right.

00:22:37 ◼   ► Right.

00:22:38 ◼   ► It shouldn't have been published off of.

00:22:39 ◼   ► And you're going to play them in a random order.

00:22:40 ◼   ► There was no point in having the screen.

00:22:41 ◼   ► The screen just made it worse.

00:22:43 ◼   ► Right.

00:22:44 ◼   ► And it also comes to that thing.

00:22:45 ◼   ► It also gets to the point that Siracusa made this week in an article about companies, the

00:22:51 ◼   ► software being the weak link in all of these hardware products at CES.

00:22:58 ◼   ► What was wrong with all the MP3 players before the iPod was their software.

00:23:02 ◼   ► The interface was just horrendous.

00:23:05 ◼   ► This is what I don't understand about this cheap iPhone thing is the way Apple made cheap

00:23:12 ◼   ► iPods is by stripping out features and making a better, more restricted device that just

00:23:18 ◼   ► did less but did it really well and easily.

00:23:22 ◼   ► And I don't see how they're going to be able to do that with an iPhone.

00:23:27 ◼   ► You can't strip out the platform.

00:23:30 ◼   ► You can't have one that's just a phone.

00:23:33 ◼   ► So what exactly are you removing?

00:23:38 ◼   ► And it seems like they're going with this, you know, to date they've just been going

00:23:41 ◼   ► with this last year's model thing.

00:23:44 ◼   ► And I don't understand if they're going to do that.

00:23:48 ◼   ► There's an intellectual laziness to the argument, this,

00:23:52 ◼   ► oh yes, finally they're going to make a cheap iPhone.

00:23:56 ◼   ► And it's the same people who think that that's

00:24:01 ◼   ► welcome and good news.

00:24:03 ◼   ► But their arguments in favor of it are intellectually so lazy.

00:24:07 ◼   ► It really all comes down to what I call the church of market

00:24:09 ◼   ► share.

00:24:11 ◼   ► It's just this religious fervor that market share is the most important thing and anything

00:24:17 ◼   ► that's a move from market share is good and anything that doesn't help your market

00:24:21 ◼   ► share is bad.

00:24:23 ◼   ► Regardless of things like profitability or consumer loyalty or building out the platform

00:24:30 ◼   ► in a sane way from a developer's perspective, none of that matters.

00:24:33 ◼   ► All that matters is if they sold an iPhone cheaper, they'd gain market share.

00:24:37 ◼   ► And that's…

00:24:38 ◼   ► Scully says that you should know myself that's it ipso facto it's it would be

00:24:41 ◼   ► good for Apple and if they don't do it it's bad and John Scully says you should

00:24:44 ◼   ► do it you should not do it what I didn't read this gully thing yet I have it open

00:24:50 ◼   ► and he basically is well his point was that they should make a small I mean a

00:24:54 ◼   ► cheaper iPhone to do just that you know and Scully I saw some I saw I know that

00:25:01 ◼   ► he has a thing I didn't read it yet but uh he gets he's getting a bad rap because

00:25:05 ◼   ► He didn't leave Apple in too bad a shape.

00:25:09 ◼   ► And the Newton thing didn't work out, but boy, he was close to a thing.

00:25:16 ◼   ► I just think he's – but his business management is poorly suited to Apple's strengths.

00:25:24 ◼   ► But if I were him, that said, even given that he left the company in pretty good shape – and

00:25:28 ◼   ► it was really Michael Spindler, his successor, who ran the company into the ground, who you

00:25:32 ◼   ► never hear of anymore.

00:25:33 ◼   ► I don't know what that guy's doing.

00:25:34 ◼   ► He's the guy I'd like to hear people get, you know, "What do you think Apple should

00:25:38 ◼   ► do?"

00:25:39 ◼   ► You might get a really good answer out of him.

00:25:40 ◼   ► But if I were Scully, boy, I would never ever get near those questions.

00:25:44 ◼   ► I just, you know, don't, don't, just don't.

00:25:48 ◼   ► Don't.

00:25:49 ◼   ► You know what I mean?

00:25:51 ◼   ► You're the guy who ran Steve Jobs out of the company.

00:25:53 ◼   ► Don't.

00:25:54 ◼   ► I would like to go…

00:25:55 ◼   ► And maybe, you know, and it's such a long, complicated thing, and maybe that really was

00:25:58 ◼   ► good for Jobs because it really made him reevaluate things and he learned lessons and, you know,

00:26:04 ◼   ► you could even argue that culturally Next was more of like a sibling to Apple than its

00:26:11 ◼   ► competitor and that the reunification in 1998 was really more like two halves that never

00:26:17 ◼   ► should have been separated coming together but it never would have happened if Jobs hadn't

00:26:22 ◼   ► been kicked out and, you know, then they never would have had Next Step which turned into

00:26:27 ◼   ► OS X and blah blah blah. But in a nutshell though, Scully screwed up. I feel like he

00:26:33 ◼   ► should just say one nice sentence about Apple and say, "But I'm not going to comment

00:26:39 ◼   ► on their management."

00:26:40 ◼   ► Yeah, it's like talking about an old girlfriend.

00:26:43 ◼   ► Right. Or it's like, what was his name? Pete Best talking about Beatles albums. You

00:26:49 ◼   ► know what I mean? Given a critique of what was wrong with the White Album. You know what?

00:26:54 ◼   ► Pete Best doesn't do that, and that for good reason.

00:26:58 ◼   ► Talking about management, old management of Apple,

00:27:00 ◼   ► I would like to go back and look at--

00:27:01 ◼   ► I haven't done this recently, and I

00:27:03 ◼   ► don't know if there's a concise place to look at this--

00:27:05 ◼   ► but what the product mix looked like when jobs or when

00:27:10 ◼   ► Emilio took over.

00:27:13 ◼   ► Because they had all those-- and if you included the clones.

00:27:18 ◼   ► Wow.

00:27:19 ◼   ► I mean, it was just a mess.

00:27:21 ◼   ► Yeah, it really was.

00:27:24 ◼   ► Yeah, because the clones were in place before Emilio came in.

00:27:29 ◼   ► Right.

00:27:30 ◼   ► Right.

00:27:31 ◼   ► Right.

00:27:32 ◼   ► Emilio wasn't there that long.

00:27:33 ◼   ► No.

00:27:34 ◼   ► He was only there for like, was it less than a year?

00:27:35 ◼   ► Maybe a year and a half or something.

00:27:36 ◼   ► He gets a bad rap too, because he actually did a pretty good job.

00:27:40 ◼   ► I mean, he didn't introduce anything new to fix the company, but he stopped a lot of

00:27:50 ◼   ► the bleeding.

00:27:51 ◼   ► Yeah.

00:27:52 ◼   ► triage surgeon, you know what I mean?

00:27:54 ◼   ► Like an ER doctor who came in and at least fixed

00:27:58 ◼   ► the stuff that was awful.

00:27:59 ◼   ► And then it was up to Jobs to come in and get some new stuff

00:28:04 ◼   ► that was going to turn it around.

00:28:08 ◼   ► But yeah, I would love to see-- I could just

00:28:10 ◼   ► see it as one of those things like on a Tumblr site,

00:28:12 ◼   ► like one of those posters.

00:28:14 ◼   ► And instead of just like all Apple products in history,

00:28:16 ◼   ► just what was the product lineup like in the summer of '96?

00:28:21 ◼   ► Right.

00:28:23 ◼   ► What did you own back then?

00:28:25 ◼   ► I had a Power Mac 9600, which was an incredible machine

00:28:33 ◼   ► at the time.

00:28:34 ◼   ► And I think it was a machine that debuted at like $4,000 or $5,000.

00:28:42 ◼   ► And it somehow quickly got superseded.

00:28:48 ◼   ► I forget what--

00:28:48 ◼   ► That happened a lot.

00:28:50 ◼   ► But I got it brand new right after the next thing had come out, and I got it for $2,100.

00:28:58 ◼   ► So six months earlier, it was retailing for $4,500, and I got it for $2,100 and used it

00:29:06 ◼   ► for years.

00:29:07 ◼   ► It was one of the best computers I've ever owned.

00:29:09 ◼   ► I had a Performa 6400, which is widely considered a road apple, but I really liked that.

00:29:20 ◼   ► I really liked it.

00:29:22 ◼   ► It had a …

00:29:23 ◼   ► It had a …

00:29:24 ◼   ► I guess it wasn't a Power – was it a Power – was my thing called a Power Map?

00:29:25 ◼   ► I think it was called a Power Map.

00:29:26 ◼   ► I think you forgot.

00:29:27 ◼   ► I think it was called a Power Map.

00:29:28 ◼   ► Yeah.

00:29:29 ◼   ► It probably would have been …

00:29:30 ◼   ► I actually forget, but I'm pretty sure that it was a Power Map.

00:29:31 ◼   ► I know it was a 9600.

00:29:32 ◼   ► Were they still making Quadras?

00:29:33 ◼   ► No, it wasn't a Quadra because it was – it wasn't Quadra – Quadra wasn't Power

00:29:39 ◼   ► power PC. And this was my first power PC. I think there was a power manual. And I remember

00:29:45 ◼   ► specifically that it was a 9600 because I named my hard drive like "HAL 9600." My

00:29:51 ◼   ► hard drive icon on that machine was a HAL icon. Because I thought, you know, if it's

00:29:57 ◼   ► 9600 and HAL was the HAL 9000, you know, obvious way to name your computer.

00:30:03 ◼   ► Did you use a kaleidoscope and lots of icon packs?

00:30:08 ◼   ► That's a great question. I did on and off for years.

00:30:12 ◼   ► Yeah.

00:30:13 ◼   ► A kaleidoscope I didn't really get into, but I did use—because I feel like by the time

00:30:19 ◼   ► kaleidoscope came out, I had outgrown that urge.

00:30:22 ◼   ► Right.

00:30:23 ◼   ► What I remember using was—was it called Aron?

00:30:29 ◼   ► Maybe. There was—yeah.

00:30:30 ◼   ► And it was by the guy who eventually went on to make kaleidoscope with somebody else,

00:30:34 ◼   ► but it was Aron. And he also had one. It was just an extension you dropped in your folder

00:30:38 ◼   ► and it changed the look and feel of your windows to look like anything. This is the crazy part,

00:30:46 ◼   ► is that Apple had purposefully ceded, like to Mac World and Mac user, screenshots of the next

00:30:52 ◼   ► generation Mac OS, the Copeland and whatever the other, Gershwin, whatever the hell they were

00:30:57 ◼   ► coming out with, and they were like, "Here's what it's going to look like." Like that. They were like

00:31:02 ◼   ► so desperate for publicity and they're so stagnant on the OS is that to keep people excited, they

00:31:08 ◼   ► revealed like two years in advance what everything was going to look like. And so this guy, what

00:31:13 ◼   ► was it, Greg Landweber made an extension called Aron which gave you that look and feel right

00:31:21 ◼   ► now. I think it was like $10 shareware or something like that. And then he came out

00:31:25 ◼   ► with one, I forget what it was called, but it did the same thing but made the Mac look

00:31:28 ◼   ► like the BOS with the yellow tab style windows. I ran that for a while.

00:31:34 ◼   ► But like I said, like you said, I think it's an itch that you get for a while, and then

00:31:40 ◼   ► once you've scratched it, you're done.

00:31:42 ◼   ► Yeah, all of a sudden you feel silly.

00:31:45 ◼   ► Maybe it's an age thing.

00:31:46 ◼   ► Or maybe it's an age thing.

00:31:47 ◼   ► Or something like that.

00:31:48 ◼   ► Like cosplay or something.

00:31:51 ◼   ► I haven't lost the urge for that yet.

00:31:53 ◼   ► I just felt like that.

00:31:54 ◼   ► I don't know.

00:31:56 ◼   ► I always thought that, especially in those days with the system extensions, that the

00:32:01 ◼   ► curve for power users was that as you got more and more into your Mac as an

00:32:06 ◼   ► enthusiast and a geek and someone who's just into it, you added more and more

00:32:10 ◼   ► extensions and when you, you know, for those of you who don't remember, when you

00:32:13 ◼   ► booted your Mac in those days, each system extension you had would put a

00:32:17 ◼   ► little icon up at the bottom of the screen and you'd get this. Usually it

00:32:20 ◼   ► would just go across one row, but if you were like really into it, you'd get two

00:32:23 ◼   ► rows and then if you really loaded your system up with extensions, you know, you'd

00:32:26 ◼   ► get the third row or even a fourth row. And you could measure how much of a nerd

00:32:30 ◼   ► you were by how many rows of those icons you got when you started your computer.

00:32:34 ◼   ► But I always thought that when you got to a certain point, it was like a bell curve

00:32:37 ◼   ► and it started going down the other way.

00:32:39 ◼   ► And the people who really knew the Mac and really got into it ran with as few extensions

00:32:44 ◼   ► as possible.

00:32:45 ◼   ► Tim Cynova – Yeah, because there was always that sense of dread that it would stop as

00:32:50 ◼   ► it was loading those icons.

00:32:51 ◼   ► John Greenewald – Oh, because it would happen sometimes.

00:32:53 ◼   ► Yeah, exactly.

00:32:54 ◼   ► Tim Cynova – I mean, I would have a lot.

00:32:55 ◼   ► John Greenewald – That you'd be doing it and one of the icons would come up and

00:32:57 ◼   ► then it would just stop at that point.

00:32:58 ◼   ► Tim Cynova – It would just freeze.

00:32:59 ◼   ► the operating system would just lock up while we were booting because you've gotten a conflict.

00:33:03 ◼   ► I know I've talked about this probably with Dan on an old talk show, but

00:33:08 ◼   ► one of the greatest software, one of the greatest apps in the history of macOS was Conflict Catcher,

00:33:15 ◼   ► which was a program whose entire point was defined and help you find and identify conflicts between

00:33:23 ◼   ► system extensions and identify them and then you could have like you know if

00:33:29 ◼   ► extension a which made your cursor turn into Snoopy dog when instead of a watch

00:33:35 ◼   ► when you were waiting for something conflicted with extension B which gave

00:33:41 ◼   ► you like a system-wide Apple script menu or something like that you could like

00:33:45 ◼   ► set presets and say okay when I'm running this extension I'm not running

00:33:49 ◼   ► this one and when I'm running the other one I'm not running this one and you

00:33:51 ◼   ► like switch between them when you started up. And the app, I just remember it was like,

00:33:56 ◼   ► you know, it was like, what were they doing then? The app was written by Jeff Robin, who

00:34:01 ◼   ► went on to write Sound Jam, which you may have heard of is now called iTunes, and he's

00:34:05 ◼   ► still at Apple.

00:34:06 ◼   ► Oh, is he really? Okay.

00:34:07 ◼   ► Yeah, because he still does the demos. He did the demo of iTunes 11.

00:34:12 ◼   ► Oh.

00:34:13 ◼   ► He's still in charge of iTunes.

00:34:15 ◼   ► Oh.

00:34:16 ◼   ► But Conflict Catcher was a huge hit.

00:34:18 ◼   ► Yeah.

00:34:19 ◼   ► And it's just so funny in hindsight that it was necessary.

00:34:21 ◼   ► necessary because we were running these things.

00:34:23 ◼   ► Do they eventually, well they made their own, right?

00:34:27 ◼   ► They made some sort of conflict management.

00:34:29 ◼   ► Yeah, but it wasn't powerful.

00:34:30 ◼   ► No, it wasn't nearly as powerful.

00:34:31 ◼   ► Like you could do it manually, but you couldn't save sets or something like that.

00:34:35 ◼   ► Yeah, something like that.

00:34:37 ◼   ► Well, the gist of it though is that, you know, ultimately long term they needed to move to something like

00:34:43 ◼   ► Mac OS X with a modern architecture where one process isn't going to hang, whether it's an extension or whatever,

00:34:50 ◼   ► isn't going to hang your whole computer. But like the people who used to complain

00:34:54 ◼   ► about their Macs locking up inevitably had like four rows of system extensions

00:34:58 ◼   ► and they were all using you know APIs that weren't meant to be used by third

00:35:03 ◼   ► party developers. Whereas if you just stuck to what Apple gave you, you just ran

00:35:06 ◼   ► the stock OS, it was very very reliable and it was pretty hard to do that though.

00:35:12 ◼   ► Because there were so many, I mean developers just began to ship those

00:35:15 ◼   ► things like crazy and you'd get a new box set of software and it would install 15 extensions.

00:35:22 ◼   ► Right. Everything was an extension. Man, you needed like Adobe Type Manager. Just to render

00:35:28 ◼   ► PostScript fonts, you needed an extension from Adobe. ATM, Adobe Type Manager. And you

00:35:34 ◼   ► had to name Adobe Type Manager. I mean, we're really out in the weeds here. But remember

00:35:38 ◼   ► you had to name Adobe Type Manager with a tilde.

00:35:41 ◼   ► Oh, yeah. Yeah, they definitely…

00:35:42 ◼   ► tilde ATM because it had to load last because of I don't even know why but you

00:35:48 ◼   ► had to make sure it loaded last and it loaded in alphabetical order and tilde

00:35:51 ◼   ► sorted to the bottom whereas most punctuation characters sorted to the top

00:35:56 ◼   ► before the letters and so it was tilde ATM I don't miss that no I don't miss

00:36:03 ◼   ► that at all which was sort of the one thing that Windows I mean even as a Mac

00:36:07 ◼   ► user we had to say that Windows 95 with protected memory and none of that stuff

00:36:14 ◼   ► was was actually an improvement we would bitch about the look and feel and how it

00:36:18 ◼   ► was all stolen from yeah there was a stable Mac that was antithetical to

00:36:27 ◼   ► apples the way things ought to have ran you know that you really did have to be

00:36:32 ◼   ► it's almost it's almost the complete polar opposite of the App Store mind

00:36:37 ◼   ► mindset, where the App Store mindset is, "Look, we've vetted this stuff, and it's in a

00:36:41 ◼   ► tech…"

00:36:42 ◼   ► You know, both two levels of protection.

00:36:45 ◼   ► A, we've vetted it personally before we allowed it into the store, and B, there's

00:36:49 ◼   ► a sandbox that technically locks this software into an area where it's not going to mess

00:36:54 ◼   ► up your whole system.

00:36:55 ◼   ► So we can't guarantee you that the app is going to be good, but we can guarantee you

00:36:58 ◼   ► that it's not going to – you're not going to screw up your computer in any way

00:37:02 ◼   ► by installing anything from the App Store.

00:37:04 ◼   ► Whereas in the '90s, with the late era of System 7 and System 8, you really had to almost

00:37:10 ◼   ► be an expert when you installed anything to make sure that it wasn't going to hose your

00:37:15 ◼   ► system, which was exactly the opposite of the System 7 and 8 days, where you really

00:37:19 ◼   ► had to do a before and after on your extensions folder to make sure that nothing sketchy had

00:37:24 ◼   ► been stuck in there.

00:37:26 ◼   ► Tim Cynova And you allocated memory manually.

00:37:28 ◼   ► Remember that?

00:37:30 ◼   ► Dave Asprey That seems so ridiculous.

00:37:33 ◼   ► Tim Cynova It does.

00:37:34 ◼   ► completely ridiculous.

00:37:37 ◼   ► You the human being decided how much RAM to give Photoshop.

00:37:42 ◼   ► RAM doubler.

00:37:43 ◼   ► Man.

00:37:44 ◼   ► Anyway, we should stop talking about that because it sounds like old man.

00:37:47 ◼   ► You know what though?

00:37:48 ◼   ► I do feel though that it does show though that Apple – yeah, Apple was not in great

00:37:52 ◼   ► shape in 1996.

00:37:53 ◼   ► Right.

00:37:54 ◼   ► That's the point.

00:37:55 ◼   ► Right.

00:37:56 ◼   ► And it's not true.

00:37:57 ◼   ► In many, many ways.

00:37:58 ◼   ► But do you want to talk about the stock, the whole stock thing?

00:38:01 ◼   ► Yeah, I do.

00:38:02 ◼   ► Before we get into the stock thing, let's take a break,

00:38:04 ◼   ► and I will do, I'm gonna do a sponsor break.

00:38:09 ◼   ► - Okay.

00:38:10 ◼   ► - I wanna tell you about a great new app for the iPad.

00:38:14 ◼   ► It's called Infinite Refrigerator.

00:38:16 ◼   ► Infinite Refrigerator.

00:38:18 ◼   ► Net name's gonna make total sense to you

00:38:20 ◼   ► as soon as I tell you what it does.

00:38:21 ◼   ► Infinite Refrigerator provides you with one or more

00:38:26 ◼   ► personalized virtual refrigerators,

00:38:29 ◼   ► and the idea is that you make one for each of your kids,

00:38:32 ◼   ► and you use it to display digital photos,

00:38:36 ◼   ► pictures of artwork, report cards, notes,

00:38:40 ◼   ► anything that you might put up

00:38:42 ◼   ► on your real-life refrigerator in your kitchen,

00:38:44 ◼   ► you can put up instead on your virtual refrigerator,

00:38:47 ◼   ► an infinite refrigerator.

00:38:49 ◼   ► Why would you do this?

00:38:50 ◼   ► Easy.

00:38:51 ◼   ► It eliminates the guilt that sort of

00:38:53 ◼   ► is the implicit guilt.

00:38:54 ◼   ► When you put stuff up on a real refrigerator

00:38:57 ◼   ► and then time goes on and you get more pictures

00:38:59 ◼   ► and you've gotta take the old stuff down

00:39:01 ◼   ► to put the new stuff up.

00:39:04 ◼   ► If you do an Infinite Refrigerator instead,

00:39:06 ◼   ► you never have to take stuff down.

00:39:07 ◼   ► You can just keep piling it in because it's a computer.

00:39:10 ◼   ► It can store it all.

00:39:11 ◼   ► And it gives you a permanent digital home

00:39:15 ◼   ► for these type of mementos.

00:39:17 ◼   ► Photos that you store on an Infinite Refrigerator

00:39:20 ◼   ► support full screen pan and zoom,

00:39:21 ◼   ► just like the built-in Photos app.

00:39:23 ◼   ► You can pick them from your camera roll,

00:39:25 ◼   ► or you can take a new picture using the app.

00:39:30 ◼   ► Put them up, it looks like a thumbnail on this little virtual fridge, there's a little

00:39:33 ◼   ► magnet.

00:39:34 ◼   ► Tap the photo, zooms to full screen, pan and zoom, everything you want.

00:39:38 ◼   ► Tap again to close and you're back to the refrigerator view.

00:39:43 ◼   ► You can supply a title and a note for each photo.

00:39:45 ◼   ► You can even record audio commentary or have your kid record audio commentary describing

00:39:50 ◼   ► the photo or the picture or the image or whatever it is in their own voice.

00:39:55 ◼   ► Unlike the real refrigerator in your kitchen, an infinite refrigerator never forgets, right?

00:40:00 ◼   ► And hanging next to each Infinite Refrigerator is a calendar.

00:40:03 ◼   ► I'll write there on screen.

00:40:04 ◼   ► Tap the calendar and you can go back in time and see what the refrigerator looked like

00:40:09 ◼   ► before.

00:40:10 ◼   ► This is the type of app where it's kind of fun to use to keep, you know, to start using,

00:40:13 ◼   ► but you're really not – and you can just imagine this.

00:40:16 ◼   ► The benefits really aren't going to come until you've been using it for months or a year

00:40:20 ◼   ► or even a couple of years and you have a whole bunch of mementos stored in this thing.

00:40:24 ◼   ► And then you can use the calendar view to go back and see what it looked like six months

00:40:28 ◼   ► or a year ago and just sort of page through time like that.

00:40:32 ◼   ► Fridges, the whole fridge, the whole collage type layout

00:40:35 ◼   ► that you make or any individual photo can be shared

00:40:39 ◼   ► through the app via email, iMessage, Twitter, Facebook,

00:40:43 ◼   ► all the standard iOS sharing stuff.

00:40:46 ◼   ► So how much does it cost?

00:40:47 ◼   ► Here's the deal.

00:40:49 ◼   ► It's an iPad app built for iOS 6.

00:40:52 ◼   ► Download the app from the App Store, absolutely free,

00:40:55 ◼   ► free download.

00:40:56 ◼   ► But here's the hitch.

00:40:57 ◼   ► You only get one fridge to start with.

00:40:59 ◼   ► It's Glacier Blue.

00:41:00 ◼   ► Now you can make more than one of them,

00:41:01 ◼   ► but if you want to use the other colors,

00:41:03 ◼   ► they've got five other styles and colors of fridges,

00:41:06 ◼   ► it's an in-app purchase, $1.99.

00:41:10 ◼   ► So it's a free app.

00:41:11 ◼   ► Download it, there's no limits to it,

00:41:13 ◼   ► but you're using the Blue Fridge.

00:41:14 ◼   ► You wanna use other colors, two bucks.

00:41:17 ◼   ► Two bucks to unlock the whole app.

00:41:19 ◼   ► Super cheap.

00:41:20 ◼   ► What a great deal.

00:41:21 ◼   ► Their website, go to infiniterefrigerator.com.

00:41:26 ◼   ► Refrigerator.com that's infinite refrigerator.com you'll find that all the information you need you'll get see how cool it looks

00:41:32 ◼   ► really cool built for kids

00:41:35 ◼   ► Last thing I noticed there's in the little virtual kitchen you get there's a little virtual kitchen surrounding your fridge

00:41:42 ◼   ► They even have a toaster and you can write messages on a piece of toast and keep that in there

00:41:47 ◼   ► So I feel like there's something in here

00:41:49 ◼   ► You could tie this together with that Tim Cook line last year about

00:41:55 ◼   ► Combining a toaster in a refrigerator, but those things are probably not going to be pleasing to the user

00:41:59 ◼   ► Well, here's an app that combines a refrigerator and a toaster and it's actually pretty cool. So maybe maybe Tim Cook was wrong on that

00:42:06 ◼   ► Once again, my thanks to infinite refrigerator go check them out at infinite refrigerator calm

00:42:12 ◼   ► So the stock yes, all right, what do you want it? What do you want to say about this stock?

00:42:19 ◼   ► I try not to write about the stock, but I feel like what's happened recently is so extraordinary that it's so absurd

00:42:25 ◼   ► that you can't not talk about it. Right. And I tried to spend at least a little bit of time trying

00:42:32 ◼   ► to understand the situation with the options, with the call options on this. Why, because you had

00:42:42 ◼   ► posted a link to something from November explaining why there is a large block of options out there,

00:42:53 ◼   ► so that with prices in the range of like 550 to 800 or something like that. So it is in

00:43:02 ◼   ► the best interest of these money managers who have those options out there to try to

00:43:08 ◼   ► keep Apple's price down until they expire.

00:43:11 ◼   ► I don't know what – I don't know enough about the stock market to know what like an

00:43:16 ◼   ► option like that costs for. But let's – the gist of it though is that back in the summer

00:43:20 ◼   ► when the stock was flying really high, like up around $700, and spent most of the summer

00:43:26 ◼   ► in the 600s.

00:43:29 ◼   ► People who bought these options, options come with, have an expiration date, and it seems

00:43:36 ◼   ► like a lot of them expire this week.

00:43:40 ◼   ► At price points, let's say, like you said, $550 to $650 or something like that.

00:43:43 ◼   ► People who thought the stock would still be like that.

00:43:45 ◼   ► So you'd buy the option for, let's say, I don't know, I don't know, I'm throwing this

00:43:51 ◼   ► out there, 10 bucks, I don't know.

00:43:53 ◼   ► Maybe it's higher, it's got to be higher, maybe it's higher.

00:43:55 ◼   ► But you buy the option for $10.

00:43:56 ◼   ► You don't own the stock, you're not buying the stock, you're just buying the right to

00:43:59 ◼   ► buy the stock at a certain price at a certain date.

00:44:04 ◼   ► And you're betting that come January 19th, Apple stock will still be up at like $700

00:44:10 ◼   ► And your option to buy the stock at $550 means you can buy a whole bunch of shares of Apple

00:44:15 ◼   ► at 550 come January and it's already worth $700 because that's what the stock is at.

00:44:22 ◼   ► And then you make money – you made money by betting that the stock would be higher

00:44:26 ◼   ► on that date than the option price.

00:44:29 ◼   ► And on the converse side, the person who sells these options is making sort of the opposite

00:44:36 ◼   ► bet.

00:44:37 ◼   ► if come the date that the options expire, the stock is under that striking price for

00:44:43 ◼   ► the option, they win because they keep the money that you paid for, that 10 bucks per

00:44:49 ◼   ► share that you paid for the option to buy it, and they still own a share that they had

00:44:54 ◼   ► to buy to cover these options if the person had actually bought them. But because it's

00:44:58 ◼   ► under the price, they don't have to sell it.

00:44:59 ◼   ► Right.

00:45:00 ◼   ► Is that – did that sound right?

00:45:02 ◼   ► That sounds right to me, yes.

00:45:04 ◼   ► Right so that there's all these institutional investors who and and the guy you know and I guess these options you can you can like

00:45:11 ◼   ► Look up what the options are I mean it wasn't like he was making stuff up like like we do

00:45:15 ◼   ► He was actually found on you know all these out

00:45:18 ◼   ► You know he was tallying all the options that are out there just at five hundred and fifty dollars

00:45:22 ◼   ► And it was like I don't know six hundred million dollars worth of them

00:45:25 ◼   ► And that wasn't counting the ones at higher prices, and so it's easy to say that there's

00:45:31 ◼   ► well over a billion dollars at stake if Apple's stock is like at 500 or lower in the next

00:45:38 ◼   ► two days.

00:45:39 ◼   ► Yeah.

00:45:40 ◼   ► Which in turn leads to, you know, the people who have those options, certainly motivates

00:45:44 ◼   ► them to sort of poo-poo, badmouth the stock and make, you know, these arguments like we've

00:45:50 ◼   ► been talking about earlier in the show about why Apple's in trouble and that they're not

00:45:53 ◼   ► doing too well and the stock is down.

00:45:55 ◼   ► And we should say that the bulk of this recent decline in Apple's, I don't even know what

00:46:03 ◼   ► it's at now actually, but the sort of the doldrums that they're in right now is because

00:46:08 ◼   ► a couple of publications came out and said that iPhone 5 demand was soft based on the

00:46:13 ◼   ► fact that they had heard from some people, nameless people, that Apple had cut orders

00:46:21 ◼   ► for iPhone 5 screens in half without really getting into what exactly that means.

00:46:30 ◼   ► Right. I mean, here's the Wall Street Journal version of it. There were two publications

00:46:36 ◼   ► that had this, I guess, Sunday night to Monday morning. It ran on the front page, I think,

00:46:41 ◼   ► of the Journal on Monday. It was Nikkei, N-I-K-K-E-I. It's a Japanese newspaper. I don't know if

00:46:48 ◼   ► It's like the Japanese equivalent of the Wall Street Journal or what.

00:46:51 ◼   ► But it's Japanese and so what I know about it is all secondhand.

00:46:55 ◼   ► It's people I guess can read Japanese and translating it.

00:47:00 ◼   ► And the journal, which seemingly had the exact same information.

00:47:03 ◼   ► Here's how the journal story started.

00:47:07 ◼   ► And the headline was "Apple Cuts Orders for iPhone Parts."

00:47:12 ◼   ► Apple Incorporated has cut its orders for components for the iPhone 5 due to weaker

00:47:17 ◼   ► than expected demand. People familiar with the situation," said Munday. So there's

00:47:22 ◼   ► like no if, ands, or buts in that sentence, right? I mean, they're not saying who the

00:47:26 ◼   ► people familiar with the situation are, and they never go on to really clarify. But that's—if

00:47:31 ◼   ► you take that at face value, if you read the Wall Street Journal and think that, well,

00:47:34 ◼   ► it's the Wall Street Journal, so if, you know, if you read it, it must be true. There's

00:47:37 ◼   ► no hemming or hawing or—well, you know, there's two things in there. One, that the

00:47:43 ◼   ► components were cut by half or no it didn't say that in the first paragraph

00:47:48 ◼   ► but it does say in the next paragraph it says Apple's orders for iPhone screens

00:47:52 ◼   ► for the January March quarter for example have dropped to roughly half of

00:47:56 ◼   ► what the company had previously planned to order two of the people said so half

00:48:00 ◼   ► is a huge number that's huge it doesn't even matter what you know what what it

00:48:04 ◼   ► was from or two and they don't hammer ha or say maybe it's or that it's a sign of

00:48:10 ◼   ► of weaker than expected demand for the iPhone 5.

00:48:13 ◼   ► They say that, the journal says,

00:48:14 ◼   ► it's due to weaker than expected demand.

00:48:16 ◼   ► And the stock took a bath on that over the next two days.

00:48:23 ◼   ► I mean, it really, I think it dropped by,

00:48:25 ◼   ► I forget, market cap-wise, it dropped by $170 million,

00:48:30 ◼   ► billion dollars, which is bigger than all but

00:48:32 ◼   ► maybe the 10 biggest corporations in the world.

00:48:36 ◼   ► They dropped in value by more than the size

00:48:38 ◼   ► of most big companies.

00:48:39 ◼   ► And originally they...

00:48:42 ◼   ► And I wrote a lot about it this week. I think the whole thing is a pile of horse shit.

00:48:47 ◼   ► I really do. And the Nikai one from Japan gave actual numbers.

00:48:54 ◼   ► It said that they said that the original order was for 65 million displays.

00:49:00 ◼   ► But apparently the journal had that in there originally and then removed it.

00:49:04 ◼   ► and then removed it.

00:49:05 ◼   ► And took it out. Like Sunday night online, they had that in there. And I don't think

00:49:10 ◼   ► it appeared in print, and by the time I read the story Monday morning, it wasn't in there,

00:49:15 ◼   ► that they had the same thing. But they didn't replace it with another number, which to me

00:49:19 ◼   ► is a huge problem. When you say it's dropped by half, but you don't say what—you don't

00:49:25 ◼   ► even give a ballpark range for what the original numbers were, there's no way to ever verify

00:49:29 ◼   ► that, right? Because then come next quarter, Apple will release and say how many iPhones

00:49:33 ◼   ► they sold and we can take a pretty good guess that what percentage of them were iPhone fives based on the average selling price

00:49:39 ◼   ► and

00:49:42 ◼   ► Whatever that number is

00:49:44 ◼   ► You could say well the journal was right because Apple expected to sell double that no matter what it is because they didn't give the number

00:49:49 ◼   ► Yeah

00:49:51 ◼   ► It's like when Amazon says that they've sold the most kindles ever in a quarter

00:49:54 ◼   ► But they never tells you how many they sold so who knows you know maybe they went from 10 to 11

00:50:00 ◼   ► Right or that the you know I forget Amazon always does that they never reveal how many kindles they've sold, but they'll say things like

00:50:06 ◼   ► You know it was 150 percent higher than the previous record for Kindle sold in the quarter. Yeah, but it's you know 150 percent of

00:50:14 ◼   ► Question mark and if they could guess if the number it just none of it

00:50:18 ◼   ► Just none of it makes any sense because it seems unlikely that they would order 65 million screens for the current quarter

00:50:25 ◼   ► Right it really makes no sense and nobody seemed to question this or well

00:50:29 ◼   ► I did but it seemed like most people people who should know better never questioned it that it's such an unusual number because there's

00:50:35 ◼   ► the most they've ever sold in a quarter is 37 million its iPhones in a quarter and that was last year's holiday quarter and

00:50:42 ◼   ► This year. There's the consensus among analysts both the Wall Street ones and the independent analysts like Andy Zaki

00:50:51 ◼   ► Who's you know have a much more accurate track record is?

00:50:54 ◼   ► is about 50 million. So they'd go from 37 million last year to 50 million this year,

00:50:59 ◼   ► year over year for the holiday quarter. And nobody is really picking a number much higher

00:51:05 ◼   ► than 50. And the next quarter after the holiday quarter, they've always sold less than the

00:51:11 ◼   ► holiday quarter because there's so many people who buy them as holiday gifts. And now, the

00:51:16 ◼   ► last two years, the holiday quarter is when the new iPhone came out. So you get the double

00:51:21 ◼   ► whammy of both the people who are like, like us, who are like, "I want the new iPhone

00:51:25 ◼   ► as soon as it comes out and order it in that quarter and you get the holiday gift bump."

00:51:31 ◼   ► Like, so last year they went from 37 million in the holiday quarter to 35 million in this

00:51:36 ◼   ► January to March quarter, which is like, I think, roughly 5% drop. In all previous years,

00:51:42 ◼   ► there's some level of drop from holiday to the next quarter. But yet, if you take the

00:51:46 ◼   ► 65 million number at face value, then somehow Apple expected 30 percent growth in the January/March

00:51:54 ◼   ► quarter after the holiday quarter, even though there's no historical reason for it and they're

00:51:59 ◼   ► not introducing a new model or anything like that. It just doesn't make any sense. Like,

00:52:05 ◼   ► if they actually wanted to order that many displays, it seems like somebody was drunk.

00:52:11 ◼   ► Although I guess the other argument I've seen, which I hadn't thought of, the other argument

00:52:16 ◼   ► I've seen, I think Horace is dead you, you know, typical of the smart, bad bastard, but

00:52:21 ◼   ► somebody pointed out that it could just be that they're getting higher than expected

00:52:24 ◼   ► yields, that maybe they, you know, had expected that only four out of every five displays

00:52:31 ◼   ► they ordered would be up to their snuff, and that they're finding that, you know, 95 percent

00:52:36 ◼   ► of them are passing their requirements, so that they, maybe they originally planned to

00:52:40 ◼   ► order 65 million not because they expected to buy…sell 65 million iPhones, but that

00:52:45 ◼   ► they needed 65 million to sell 45 million because they expected 20 million of them to

00:52:50 ◼   ► be duds or something like that.

00:52:51 ◼   ► So there's other arguments you can make, but it's still the 65 million thing just

00:52:55 ◼   ► does not…it doesn't make any sense.

00:52:59 ◼   ► And it doesn't make any sense that they would need to cut it in half due to…this

00:53:03 ◼   ► is the bigger part, I think, regardless of the actual number.

00:53:06 ◼   ► The bigger part is whether such a cutoff would be due to weaker than expected demand, because

00:53:12 ◼   ► there seems to be no sign that there's weaker than expected demand.

00:53:14 ◼   ► I am almost across the border saying that they expect 50 million iPhones sold this quarter

00:53:20 ◼   ► – the quarter that they're going to announce next week – versus 37 million last year,

00:53:24 ◼   ► which is higher, not lower.

00:53:26 ◼   ► And they only caught up with demand about a month ago.

00:53:28 ◼   ► Right.

00:53:29 ◼   ► They spent most of that holiday quarter with – you know, when you go to the website with

00:53:33 ◼   ► with, you know, like seven to ten day lead times when you ordered one. They spent most,

00:53:39 ◼   ► you know, up until I think December, they, you know, they hadn't, production hadn't

00:53:42 ◼   ► caught up with demand. They'd clearly been making them as fast as they could.

00:53:46 ◼   ► Tim Cynova It's ridiculous. I mean, and then of course

00:53:49 ◼   ► the usual collection of ne'er-do-wells have been saying, "See, we told you that iPhones,

00:53:57 ◼   ► nobody likes iPhones anymore."

00:53:59 ◼   ► Right. And the other thing I got inundated with is accusations of, you know, I swear

00:54:04 ◼   ► to God, one guy called me Baghdad Bob. You know, it's like, I don't know, I can't

00:54:14 ◼   ► win. I mean, there's no use worrying about it. I mean, but this is why I drink. But this

00:54:20 ◼   ► is no way, you know, they're so convinced that it doesn't matter how many holes you,

00:54:26 ◼   ► solid holes you can poke and say, "Boy, this just doesn't add up," and point to

00:54:31 ◼   ► interesting ways of looking at why it doesn't add up. It's the fact that

00:54:35 ◼   ► there's so many people, and it gets back to, you know, what we were talking about

00:54:38 ◼   ► at the beginning of the show, who are so convinced that Apple is set to fall and

00:54:42 ◼   ► that the iPhone is collapsing, that they just took that journal story and

00:54:50 ◼   ► that's it. It's the gospel, right? And so anybody who's arguing otherwise is just

00:54:54 ◼   ► grasping at straws because they're beloved apple.

00:54:57 ◼   ► Yeah, because it's a religion.

00:54:58 ◼   ► Because it's a religion.

00:55:02 ◼   ► So next week, there's a couple of things to look for.

00:55:06 ◼   ► Look to see what happens with Apple's share price because of these options and then look

00:55:11 ◼   ► to see at the conference call, part of the conference call, how many iPhones they sold,

00:55:18 ◼   ► which you should do every quarter.

00:55:19 ◼   ► But…

00:55:20 ◼   ► Right.

00:55:21 ◼   ► I do wish that they would break it out.

00:55:22 ◼   ► guess, you know, I mean we should, we're lucky because Apple reveals a lot more

00:55:26 ◼   ► sales data than a lot of its competitors. I mean, like I said, Amazon has never

00:55:29 ◼   ► revealed how many Kindles they've sold of any kind. Google never reveals how

00:55:37 ◼   ► many Android phones are sold. They just have that weird activation number that

00:55:40 ◼   ► they never define what the hell it means. And, you know, they certainly don't

00:55:46 ◼   ► reveal numbers of their own Nexus stuff, which they would know more than just

00:55:50 ◼   ► activation. They should know exact sales numbers. Nobody really reveals any of that.

00:55:54 ◼   ► So I guess you wish I mean I'm greedy though I wish that Apple would break it

00:55:57 ◼   ► down and say we sold this many iPhone 5's this many 4's and this many 4S's.

00:56:01 ◼   ► Yeah I guess so apparently I guess it's not it's not required for audit purposes

00:56:07 ◼   ► to do that. No but they you can kind of backwards engineer it though by at least

00:56:12 ◼   ► getting a ballpark estimate by looking at the average selling price and right

00:56:17 ◼   ► through analytics. But it's kind of weird that app developers and websites, mobile websites,

00:56:22 ◼   ► looking at their statistics can kind of suss out how many. Although I'm not sure if a website

00:56:27 ◼   ► can tell if your iPhone's an iPhone 5. I think it would just know the version number. I guess

00:56:32 ◼   ► it's only the app developers that get the analytics that they can kind of tell, you

00:56:36 ◼   ► know, what the CPU is. You can tell by screen size, right? Couldn't you do the – doesn't

00:56:43 ◼   ► to tell the screen size? Oh, it does. I don't know. In that instance, you can tell. I guess

00:56:49 ◼   ► what I'm saying is I don't know how to – I guess since the iPhone – it does report

00:56:55 ◼   ► the screen size, you can tell because the only iPhone with the 1136 pixel height is

00:57:00 ◼   ► the iPhone 5. But it's weird that Apple reports more than

00:57:03 ◼   ► other – I mean, Apple, which is famously – Secretive. It reports more about what

00:57:10 ◼   ► sell than other companies do.

00:57:12 ◼   ► Yeah, and you know, part of it is that they're not really secretive about everything. They're

00:57:16 ◼   ► really mostly secretive about what they're going to do.

00:57:18 ◼   ► Right.

00:57:19 ◼   ► And they're not so secretive about what they have done.

00:57:22 ◼   ► What they've done.

00:57:24 ◼   ► You know, and I feel, you know, I've always said this too, that, you know, and it still

00:57:27 ◼   ► continues even now that Jobs is gone. But Jobs' explanations on stage talking about

00:57:32 ◼   ► products really, I have always thought they were incredibly insightful and honest about

00:57:38 ◼   ► about where Apple was coming from when they made the thing.

00:57:41 ◼   ► You know, that it was like an honest explanation

00:57:44 ◼   ► of here's what we were thinking we could do

00:57:46 ◼   ► and here's how we did it.

00:57:46 ◼   ► - Yeah.

00:57:47 ◼   ► I went back and watched the iMac unveiling,

00:57:54 ◼   ► which I don't think I'd actually seen that before.

00:57:57 ◼   ► - I don't think I have either.

00:57:59 ◼   ► Wasn't he wearing like a weird suit?

00:58:00 ◼   ► - Yeah, he was wearing a, well, he was wearing a jacket.

00:58:04 ◼   ► It was like a suit with a button-up shirt,

00:58:07 ◼   ► button up to the top without its eye.

00:58:10 ◼   ► It was weird. It's like, I guess, it's sort of like if you ever thought, like,

00:58:14 ◼   ► you know, in a heyday in that decade-long run, if you ever, like, crossed your mind,

00:58:18 ◼   ► like, "Why does he wear the same stuff every day?" And then you look at some of the

00:58:22 ◼   ► stuff he wore before he settled on that, and you're like, "Maybe he was right to

00:58:25 ◼   ► settle on the black shirt and jeans," and that's it.

00:58:30 ◼   ► He had some goofy outfits in those first couple years.

00:58:34 ◼   ► He swore us like a sweater vest for a long time.

00:58:40 ◼   ► Right.

00:58:41 ◼   ► Do you have a link to that YouTube?

00:58:42 ◼   ► Is it on YouTube?

00:58:43 ◼   ► Yes.

00:58:44 ◼   ► It is on YouTube.

00:58:45 ◼   ► I can find it for you.

00:58:46 ◼   ► Yeah.

00:58:47 ◼   ► You should send me that.

00:58:48 ◼   ► We'll put that in the show notes.

00:58:49 ◼   ► Yeah.

00:58:50 ◼   ► But it's interesting.

00:58:51 ◼   ► I thought it was just funny how he touts the mouse as like the best mouse ever made.

00:58:56 ◼   ► You know, you can get people fired up about that.

00:58:57 ◼   ► You know that my wife is an enormous fan of the hockey puck.

00:59:01 ◼   ► Are you kidding me?

00:59:02 ◼   ► Loved it.

00:59:03 ◼   ► I forget. She tweeted about it a couple months ago, and a couple of other of our nerd friends,

00:59:08 ◼   ► a couple of them chimed in and said, "You know, I liked it too." It was not universally despised.

00:59:13 ◼   ► Although I think it was majority despised.

00:59:16 ◼   ► Tim Cynova Yeah. I had a little like, they just, they sold like these clip-on things,

00:59:22 ◼   ► these plastic, like a clip-on tie, with basically a piece of plastic you clipped on it to make it a

00:59:28 ◼   ► more like a normal mouse.

00:59:30 ◼   ► Yeah, I never had a computer that came with one of the round mice, so I never really spent a lot of

00:59:36 ◼   ► time with it. I mean, it's... But I guess the argument, the main argument about it was that

00:59:42 ◼   ► because it was perfectly round, there was no way to tell which way it would... When you just held it

00:59:47 ◼   ► without looking at it, you couldn't be certain what the orientation was. Yeah. Yeah. Not a fan.

00:59:54 ◼   ► a lot of people thought it was uncomfortable too.

00:59:56 ◼   ► It was wide, which I liked because it just, that felt good, but I couldn't tell which way it was

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01:02:59 ◼   ► else? What do we got left on the agenda? Here's a question. And again, this is one of the

01:03:06 ◼   ► reasons why I sometimes feel out of place talking about the stock. I'm not really a

01:03:10 ◼   ► stock expert and my Apple's stock price is not really the reason that I follow them.

01:03:17 ◼   ► I don't own Apple stock because I don't feel like it would be appropriate with what I do.

01:03:26 ◼   ► I do feel though that it's it is like it when it really fluctuates like it has recently

01:03:32 ◼   ► It's a level of absurdity that even somebody like me is not an expert can can see that this just is irrational

01:03:39 ◼   ► You know that it's not built on based on what what investors call the fundamentals meaning the numbers, right?

01:03:45 ◼   ► There's there's so many

01:03:49 ◼   ► It's like 12 dimensional chip. It's like trying to understand 12 dimensional chess, right?

01:03:53 ◼   ► There's so many other things that go into it, and so many things that are just straight

01:03:58 ◼   ► out gambling that have nothing to do with the company at all, like these option calls,

01:04:06 ◼   ► that it seems like they're just better off not worrying about it.

01:04:13 ◼   ► So there's a measurement of a company stock price called the P/E ratio, price to earnings.

01:04:19 ◼   ► And again, correct me if I'm wrong, but the basic idea is you take the company's profits

01:04:26 ◼   ► and you multiply it by a certain – or you take the company's stock price and you divide

01:04:31 ◼   ► it by what their profits are, and that's the P/E ratio.

01:04:34 ◼   ► In other words, the price of the stock versus how much profit they're making, I guess,

01:04:40 ◼   ► quarterly.

01:04:41 ◼   ► And like the average for the S&P 500 is 15.

01:04:45 ◼   ► In other words, the average stock price of a big company is about 15 times the profit

01:04:50 ◼   ► of that company. And you know, some companies are higher, some companies are lower. But

01:04:54 ◼   ► you know, 15 to me seems like a reasonable…somehow it makes sense to me. That seems about right.

01:05:02 ◼   ► What, 15 is, you know, four years quarterly? You know, so a company is worth about four

01:05:10 ◼   ► years times its profits? I don't know. Sounds about right. Apple's is at like 10. And if

01:05:16 ◼   ► you subtract the hundred billion dollars in cash that they have in the bank, which seems

01:05:20 ◼   ► fair because if you're just going to say, here's what the company's worth, which is

01:05:24 ◼   ► what the stock price is supposed to represent, well, the cash you should be able to just

01:05:28 ◼   ► subtract from that. If you subtract that that massive amount of cash, it's nine. So their

01:05:34 ◼   ► their PE ratio is way less than the average company. Yet they've been in the midst of

01:05:40 ◼   ► this incredible growth over the last couple of years. And the number that gets me is Amazon's.

01:05:46 ◼   ► Amazon's P/E ratio, and I'm not making this up, it's like 2,600. It's not an exaggeration.

01:05:55 ◼   ► Amazon lives in like this—I linked to a Matt Iglesias article a while ago that Amazon

01:06:00 ◼   ► lives in this world where investors do not care about their profits, that their stock

01:06:05 ◼   ► The stock price is not, bears no relation to their profitability whatsoever.

01:06:09 ◼   ► They're the market share poster child.

01:06:11 ◼   ► Right. And Apple, I think, is almost the opposite.

01:06:14 ◼   ► Right. I was just going to say, they're two ends of the spectrum.

01:06:17 ◼   ► Even though they have profits. Massive profits.

01:06:20 ◼   ► I just, I don't get that. It seems like it's still the same old dot-com bubble mentality where,

01:06:28 ◼   ► "Oh, yeah, they're not making any money, but eventually, eventually they'll make money."

01:06:34 ◼   ► I mean, Amazon's been doing this for 15 years.

01:06:38 ◼   ► Yeah, I feel like with Amazon, Amazon's interesting.

01:06:41 ◼   ► And I have to admit, I don't get that strategy.

01:06:44 ◼   ► Like to me, it's just, it's not just because it's Apple, but I, there's something, you

01:06:49 ◼   ► know, I think it's part of what just appeals to me about the whole thing is that I understand

01:06:53 ◼   ► what Apple's doing is making money every time they sell something and then just putting

01:06:59 ◼   ► that money away and not squandering it.

01:07:00 ◼   ► Now, I understand that.

01:07:01 ◼   ► That's not how I behave in real life.

01:07:03 ◼   ► I make money and then I squander every dollar of it. But I wish that I had the discipline

01:07:08 ◼   ► to build up a huge, you know, $100 billion cash hoard.

01:07:13 ◼   ► And before the show, when I was making notes, I wrote down the 100—I wanted to talk about

01:07:17 ◼   ► this—and I wrote down 100 billion cash. And I thought, "That can't be right. No,

01:07:21 ◼   ► it's 10 billion, right? It can't be 100." But it is. It's 100—they have $100 billion

01:07:25 ◼   ► in cash that they're just sitting on. But when I wrote it down, it seemed like a preposterous

01:07:31 ◼   ► number.

01:07:32 ◼   ► It does seem preposterous. It seems crazy.

01:07:36 ◼   ► Right. But it doesn't seem to have any kind of value in that it doesn't become valuable in the

01:07:43 ◼   ► stock. And you know, I guess you could argue maybe reasonably that the run-up that Apple had

01:07:50 ◼   ► last year over the summer when the stock price reached its peak, maybe that was a little

01:07:55 ◼   ► irrational too, just as irrational as the dive that it's taken in the last three months. But,

01:08:02 ◼   ► even at its peak, their PE ratio was still like, never got more than like 12 or 13. It still never

01:08:10 ◼   ► reached the average PE ratio of a company in the S&P 500. That you could make a reasonable case

01:08:16 ◼   ► that only looking for a PE value of the average company in the S&P 500, that Apple stock should,

01:08:22 ◼   ► you know, should be up at around, I don't know, 800 or 850 or something like that.

01:08:25 ◼   ► I had a screen capture that I had for a little while, and I finally eventually just deleted

01:08:31 ◼   ► because I didn't know where to post it. But it was our local paper, I followed their Twitter

01:08:37 ◼   ► account. And I think they're just, they're pulling wire stories for this stuff because they don't,

01:08:41 ◼   ► they don't follow this directly themselves. But it was back in October, I think when Apple,

01:08:49 ◼   ► both Apple and Amazon were reporting their quarterly numbers. Apple had a good quarter,

01:08:57 ◼   ► missed the analyst estimates of course again. But Amazon reported a loss, if I remember

01:09:07 ◼   ► correctly.

01:09:08 ◼   ► Yeah, I think the last quarter Amazon reported a pretty big loss, like $247 million.

01:09:11 ◼   ► Yeah. Both of the tweets which came within 15 minutes of each other or something like

01:09:18 ◼   ► that said about each of them, "Apple misses analyst's estimates.

01:09:26 ◼   ► Amazon misses analyst's estimates," as if the two both had equally bad quarters.

01:09:33 ◼   ► When Amazon reported a big loss and Apple made a whole crap ton of money.

01:09:39 ◼   ► Darrell Bock Yeah, and you've written about this pretty

01:09:42 ◼   ► well about when Apple does miss the analyst projections that it is so… the way it gets

01:09:51 ◼   ► played in the stories is so misleading. It is… and again, I'm not trying to be a

01:09:57 ◼   ► reflexive "defend Apple at all costs and paint no matter what the news is" is good

01:10:02 ◼   ► for Apple, but it emphasizes "miss, miss, miss, miss, miss" and doesn't mention

01:10:09 ◼   ► that it was the miss involved $8.2 billion in profit.

01:10:13 ◼   ► Right.

01:10:14 ◼   ► And it's sort of – I mean I think the idea, if you want to take their point of view,

01:10:18 ◼   ► is that it's an industry shorthand for if you have money in Apple, you might have just

01:10:26 ◼   ► overestimated because if you were betting on what the analyst said, then they weren't

01:10:33 ◼   ► quite right.

01:10:34 ◼   ► But for the average person, they don't understand that.

01:10:39 ◼   ► They just think Apple had a bad quarter.

01:10:41 ◼   ► Right.

01:10:43 ◼   ► And it's entirely – yeah, because they don't put that context in there, right?

01:10:48 ◼   ► And it emphasizes only the – it emphasizes only the miss.

01:10:53 ◼   ► And the miss is just of numbers that analysts pull out of their hats.

01:10:57 ◼   ► I mean, not entirely.

01:10:59 ◼   ► You know, I –

01:11:00 ◼   ► It's based on something, but it's never –

01:11:01 ◼   ► Right.

01:11:02 ◼   ► They've got spreadsheets that they're looking at.

01:11:03 ◼   ► But they're just making a guess.

01:11:05 ◼   ► I guess, hopefully in most cases, an educated guess, but it's still just a guess. And

01:11:10 ◼   ► you look at things like, well, year over year, how are they doing? And it's up, up, up,

01:11:14 ◼   ► up, up, you know. Even in the quarter with the miss, it was up, up, up. It's just that

01:11:20 ◼   ► it just wasn't up as high as a lot of these analysts had guessed. And it's just, you

01:11:25 ◼   ► know, and again, I'm not saying that they shouldn't report that, but it just seems

01:11:27 ◼   ► like the way that they presented is so heavy-handed. And I think part of it, even if you don't

01:11:33 ◼   ► have to be have an apple bias a specific anti-apple bias but I think it's this

01:11:38 ◼   ► mindset that we've written so many good things about Apple and their success

01:11:41 ◼   ► that we need to emphasize anything that's bad in the name of objectivity

01:11:49 ◼   ► you know I think that's you know it gets back to why everybody jumped on this

01:11:53 ◼   ► and ten agate story you know so it's such fervor is that well here's

01:11:59 ◼   ► something we can say that Apple did that is imperfect and now we're going to

01:12:03 ◼   ► to hammer it into the ground.

01:12:06 ◼   ► It's very strange to me that they come up with such vastly different numbers.

01:12:13 ◼   ► It is.

01:12:14 ◼   ► And I'll tell you, here's the point I wanted to make, was that it seems like Apple's

01:12:16 ◼   ► getting hurt because for a long time, Apple would offer their own guidance.

01:12:21 ◼   ► They still do.

01:12:22 ◼   ► I think they're legally obligated to it.

01:12:23 ◼   ► At the end, after they report the last quarter, they offer guidance for the coming quarter.

01:12:28 ◼   ► Apple notoriously offered

01:12:30 ◼   ► Sandbagged guidance, you know in other words, you know

01:12:34 ◼   ► They it was not what Apple honestly expected to report

01:12:38 ◼   ► It was it was a number that it was a number they were sure they were comfortable

01:12:42 ◼   ► We're yeah, it was a number they would pick their

01:12:45 ◼   ► their

01:12:47 ◼   ► Numbers and they'd be a little you know somewhat higher than Apple's project own projections

01:12:52 ◼   ► But all of them were short of reality and I think that what's happened over the last year is that you know

01:12:58 ◼   ► they've finally caught on that Apple's projections are so low that they've adjusted

01:13:05 ◼   ► their own to be even higher to compensate and that they've really more gotten good.

01:13:10 ◼   ► Right?

01:13:11 ◼   ► Right?

01:13:12 ◼   ► It's like even the miss that they reported last quarter wasn't that far off.

01:13:18 ◼   ► It was actually so like it's really not so much that Apple missed or came way below.

01:13:23 ◼   ► It was that these analysts projections were actually pretty spot on for a while.

01:13:28 ◼   ► once instead of coming in way under and having Apple blow them away.

01:13:33 ◼   ► Right.

01:13:34 ◼   ► Yeah.

01:13:35 ◼   ► Which is another – yeah, it's just another element of the whole thing that makes this

01:13:41 ◼   ► also incomprehensible and I throw my hands at that trying to figure this stuff out.

01:13:47 ◼   ► It doesn't seem like – you always think, "Well, maybe the people who are really into

01:13:51 ◼   ► this stuff, they know all this."

01:13:52 ◼   ► But it really – I don't get that sense.

01:13:55 ◼   ► No.

01:13:56 ◼   ► And I think the analysts know all this.

01:13:57 ◼   ► And I'll bet most of the people out there who listen to the show,

01:14:01 ◼   ► I'll bet a lot of them do own some Apple stock.

01:14:03 ◼   ► And hopefully the way that they do it is just buy it when somebody--

01:14:07 ◼   ► like last week, when somebody prints something stupid

01:14:09 ◼   ► and the stock drops down.

01:14:12 ◼   ► Buy it then, and then just put it away and don't look at it.

01:14:16 ◼   ► And assume that it's gone up and will keep going up in the long run over time.

01:14:20 ◼   ► But if I owned Apple stock and looked at the numbers

01:14:25 ◼   ► and week to week and jackass by jackass. I would have indigestion. I would be like sick.

01:14:31 ◼   ► [Laughter]

01:14:32 ◼   ► Mike: So much of it – and the thing is it's – there's that famous phrase that's always

01:14:38 ◼   ► in – if you get like a statement from your mutual fund company and it's like past performance is no

01:14:44 ◼   ► indication of future performance or something like that. And it gets back to that point about

01:14:49 ◼   ► whether or not Apple needs a hit. And whether or not they sold a lot of iPhones this past quarter,

01:14:57 ◼   ► I mean, that's done. It's the stuff that they're going to do in the future that's going to get you

01:15:03 ◼   ► growth potential out of the stock, provided the market doesn't do something dumbass like

01:15:11 ◼   ► like it's been doing the last week.

01:15:14 ◼   ► So you kind of have to decide based

01:15:18 ◼   ► on the history of the company-- I mean,

01:15:21 ◼   ► I guess you base this judgment on the history of the company

01:15:24 ◼   ► and the management of the company,

01:15:25 ◼   ► whether or not you think that they're

01:15:27 ◼   ► going to be able to do something in the future that's

01:15:30 ◼   ► going to be a big hit and they're going

01:15:31 ◼   ► to get a lot of growth out of.

01:15:32 ◼   ► And I don't understand-- you could

01:15:34 ◼   ► say that Steve Jobs is the only one that could innovate at Apple

01:15:37 ◼   ► and so therefore I don't think the company's going to do.

01:15:41 ◼   ► They're just going to make iPhones and iPads

01:15:43 ◼   ► and Macs for the rest of forever

01:15:46 ◼   ► and they'll never have another breakout product.

01:15:49 ◼   ► But I don't, that seems incredibly short-sighted to me.

01:15:53 ◼   ► And I don't own the stock, but just for--

01:15:55 ◼   ► - The thing, and it's, I just feel like all of them,

01:16:00 ◼   ► all of their executives, but Tim Cook in particular,

01:16:03 ◼   ► he's the one, you know, he's the one who sits on the throne now. My hat is off to him for

01:16:10 ◼   ► just not blowing his stack and going nuts because there's no way he can't win and he surely knows it,

01:16:18 ◼   ► right? So he's getting excoriated now because Apple hasn't released a major new innovation

01:16:23 ◼   ► disruption since he took over as CEO. And if and when eventually they do, I guarantee 99, 99, 99,

01:16:33 ◼   ► times out of a hundred, 99 chance out of a hundred, it's going to be dismissed as, "Wow,

01:16:39 ◼   ► that's terrible. This guy's no Steve Jobs." And if Jobs had died two years earlier and

01:16:47 ◼   ► the iPad, exactly as it is, exactly as it was in 2010, was introduced under Tim Cook,

01:16:54 ◼   ► that whole, "Oh, it's just a big iPhone. Meh, you know, that's it. It's just a nine-inch

01:17:01 ◼   ► it would have been ratcheted up to 11 as it's nothing but a big iPhone total turd

01:17:07 ◼   ► This guy is no Steve Jobs

01:17:09 ◼   ► All he did is take the iPhone and make it 10 inches guys an idiot apples apples doomed and

01:17:15 ◼   ► They still would have sold just as many right because real people that tune out to they go and yeah

01:17:21 ◼   ► I go in the store for the most part. That's cool. This is cool

01:17:24 ◼   ► I'm gonna buy but I think it would have been you know and and you know

01:17:26 ◼   ► I I expect that whatever you know Apple's next big thing is it's you know

01:17:30 ◼   ► Like, almost all of their things that have been innovations don't look like innovations

01:17:35 ◼   ► to the people watching right away, to most people.

01:17:41 ◼   ► That's just not how it works.

01:17:46 ◼   ► Under Jobs, there was enough faith that they would just say, "Eh, kind of a turkey."

01:17:52 ◼   ► But now that he's gone and everybody is looking for this doom situation, this "Apple

01:17:56 ◼   ► can't function without Steve Jobs," the exact same thing is just going to be turned

01:17:59 ◼   ► up to 11. Yeah. So it'll be interesting to see when they do release something. And I

01:18:06 ◼   ► personally don't have any doubt that eventually within the next few years they'll enter some

01:18:14 ◼   ► new market. I would think they have to. Yeah. I think it's inevitable. But I just don't

01:18:20 ◼   ► know that you – it'll happen when – you can't make it happen now. There was no way

01:18:27 ◼   ► to make the iPhone sooner. Yeah, you can argue that, "Wow, it took six years between the

01:18:31 ◼   ► original iPod until they did the iPhone. Why couldn't they do that sooner?" But there was

01:18:36 ◼   ► no way. I mean, the iPhone was so ahead of its time technologically. I just don't think

01:18:41 ◼   ► there was any way to make it before. There weren't chips or touch screen. None of the

01:18:45 ◼   ► technology existed.

01:18:46 ◼   ► Tim Cynova You could argue that the fact that – I mean,

01:18:49 ◼   ► this is – I know people are going to roll their eyes at this, but the fact that they

01:18:52 ◼   ► haven't introduced something is just proof that the company is actually still the same

01:18:57 ◼   ► because companies that are bad throw crap out the door every day and respond immediately

01:19:06 ◼   ► to whatever is going on in the market and try to match what's happening, whereas Apple

01:19:11 ◼   ► sits on their stuff and makes sure they get it right before they send it out the door,

01:19:18 ◼   ► which is why these things only come out every three to six years or whatever it is.

01:19:22 ◼   ► Right.

01:19:23 ◼   ► And in the meantime, they're going to keep doing what they've always done, which is iterate

01:19:26 ◼   ► on the stuff that's already out there and popular as aggressively as they can. And iteration

01:19:32 ◼   ► to iteration never really making any single great leap forward, but yet, you know, and

01:19:39 ◼   ► with a little bit, even just a little bit of hindsight, making remarkable progress,

01:19:42 ◼   ► right? I mean, three years ago, they were still selling the iPhone 3GS. I mean, you

01:19:46 ◼   ► compare the iPhone 5 to the 3GS and it's, you know, it's like night and day. That's

01:19:52 ◼   ► the other thing that kills me about these, the pessimists on Apple that say that like,

01:19:57 ◼   ► I keep saying over and over again that innovation in smartphones is over. Like, smartphones

01:20:01 ◼   ► are done, so they've got to move on to the next big thing because smartphones have been

01:20:05 ◼   ► completely commoditized. And it's like, are you nuts? It's like, I can't believe

01:20:10 ◼   ► anybody would think that when there's so much more room for faster computing and faster

01:20:17 ◼   ► graphics and thinner phones and more durable materials and I mean just the camera alone

01:20:27 ◼   ► is making such unbelievable progress year over year. I mean that's like the one thing

01:20:31 ◼   ► where I can almost tell like when I look back at like family photos and stuff like that

01:20:37 ◼   ► like I look back at the ones I snapped on my iPhone two years ago and they look terrible

01:20:41 ◼   ► like just from a technical perspective. Just camera technology alone is, there's so much

01:20:49 ◼   ► room for potential for new hardware and stuff going forward. Makes me nuts.

01:20:56 ◼   ► Hey, I'm going to see you at Macworld.

01:21:01 ◼   ► Oh yeah, I'm going to Macworld. That's worth being on the show. Everybody out there,

01:21:07 ◼   ► everybody should go to Macworld Expo. What is that, two weeks?

01:21:09 ◼   ► Two weeks.

01:21:10 ◼   ► I think we'll be there two weeks from today.

01:21:14 ◼   ► I think I'm on a panel two weeks from today.

01:21:17 ◼   ► You want any panels or anything?

01:21:18 ◼   ► You're speaking?

01:21:19 ◼   ► Mike: Not that I know of.

01:21:20 ◼   ► Not yet anyway.

01:21:23 ◼   ► I often get drawn into something late because I always book late.

01:21:26 ◼   ► I am booked.

01:21:27 ◼   ► I am now booked as of a couple of days ago.

01:21:32 ◼   ► But yeah, looking forward to it.

01:21:35 ◼   ► I haven't been to San Francisco.

01:21:36 ◼   ► That's fair.

01:21:37 ◼   ► On the talk show where I get to see you.

01:21:38 ◼   ► I'll see you soon.

01:21:39 ◼   ► That's right.

01:21:40 ◼   ► That's right.

01:21:40 ◼   ► [BLANK_AUDIO]