Upgrade

00:00:00 ◼   ► We'll see you next time.

00:00:30 ◼   ► We did everything today. Jingles.

00:00:31 ◼   ► We just did a little...

00:00:32 ◼   ► Yeah, it's true. We have those.

00:00:33 ◼   ► I was just doing a little...

00:00:35 ◼   ► You're like, oh, hi, Jason.

00:00:36 ◼   ► I'm like, hey, it's my buddy Mike.

00:00:38 ◼   ► It's my pal Mike.

00:00:39 ◼   ► We're just talking.

00:00:39 ◼   ► We're just chatting.

00:00:40 ◼   ► We would like to thank friend of the show,

00:00:42 ◼   ► podcaster Lex Friedman,

00:00:44 ◼   ► not the Friedman.

00:00:46 ◼   ► Other one.

00:00:46 ◼   ► The other one, for making our jingles.

00:00:49 ◼   ► Lex made our jingles last year.

00:00:51 ◼   ► We love these jingles so much.

00:00:52 ◼   ► We want to use them again.

00:00:53 ◼   ► As well as being a wonderful podcaster and friend,

00:00:55 ◼   ► Lex also makes wonderful word games

00:00:58 ◼   ► over at lex.games.

00:01:00 ◼   ► We should recommend people go and check those out

00:01:01 ◼   ► as a thank you for Lex making these wonderful jingles for us.

00:01:04 ◼   ► It is the money time.

00:01:06 ◼   ► So we're talking about Apple's earnings today.

00:01:08 ◼   ► That's why we're doing it.

00:01:09 ◼   ► Because that's the breakout hit of the jingles.

00:01:12 ◼   ► Yeah.

00:01:12 ◼   ► And yesterday we were like,

00:01:13 ◼   ► why don't we just break out all the jingles?

00:01:15 ◼   ► So Jason, why don't you take it away?

00:01:17 ◼   ► Oh yes, we have our first jingle.

00:01:20 ◼   ► Okay.

00:01:20 ◼   ► I'm not supposed to introduce the jingles.

00:01:22 ◼   ► They're just supposed to happen magically,

00:01:23 ◼   ► but I'm a little rusty here.

00:01:25 ◼   ► Okay.

00:01:25 ◼   ► I'm a little rusty.

00:01:27 ◼   ► Hey Jason, what do you think?

00:01:29 ◼   ► It's time for Snell Talk.

00:01:31 ◼   ► As the jingle says, it is in fact time for Snell Talk.

00:01:35 ◼   ► And I have a question here from Bruce who wants to know,

00:01:37 ◼   ► Jason, on the Apple Results YouTube video

00:01:39 ◼   ► that you and Dan made last week,

00:01:41 ◼   ► you were drinking what appeared to be tea with no dairy.

00:01:44 ◼   ► Was that green tea?

00:01:45 ◼   ► Regular orange pico tea?

00:01:48 ◼   ► If it was the latter,

00:01:49 ◼   ► do you drink regular tea without milk?

00:01:52 ◼   ► I had to look up orange pico

00:01:54 ◼   ► because it's apparently a kind of tea

00:01:55 ◼   ► that is labeled on the box of like Lipton tea

00:01:58 ◼   ► or something in America.

00:01:59 ◼   ► The tea I drink does not have that as a descriptor.

00:02:04 ◼   ► I don't know.

00:02:06 ◼   ► I'm not a tea expert to say what the difference is

00:02:08 ◼   ► between these different ways of making tea.

00:02:10 ◼   ► But the answer is on the $6 video,

00:02:13 ◼   ► I think it was a Darjeeling,

00:02:15 ◼   ► but usually I am drinking an English breakfast.

00:02:17 ◼   ► And although when I started drinking tea,

00:02:19 ◼   ► it was as a honey delivery mechanism.

00:02:21 ◼   ► Today, I have no honey in it.

00:02:25 ◼   ► It's just black.

00:02:26 ◼   ► There's no dairy.

00:02:27 ◼   ► My wife has milk in her tea, but I don't.

00:02:29 ◼   ► That's the answer.

00:02:31 ◼   ► You drink like English breakfast tea without milk.

00:02:34 ◼   ► Or honey.

00:02:35 ◼   ► Yes, correct.

00:02:36 ◼   ► Wow.

00:02:37 ◼   ► That is pretty hardcore.

00:02:38 ◼   ► I don't think a lot of people do that.

00:02:40 ◼   ► I mean, I like,

00:02:42 ◼   ► I like Earl Grey,

00:02:43 ◼   ► which I drink with no milk,

00:02:45 ◼   ► which is the way to drink Earl Grey.

00:02:47 ◼   ► But I don't often hear of people drinking

00:02:51 ◼   ► kind of just like English breakfast tea black.

00:02:54 ◼   ► So that's pretty cool.

00:02:54 ◼   ► You're a tea fan.

00:02:55 ◼   ► Big tea fan.

00:02:56 ◼   ► Well, that was an easy way

00:02:58 ◼   ► to cut some sugar out of my diet

00:03:01 ◼   ► was the honey.

00:03:02 ◼   ► And I thought I could do that.

00:03:03 ◼   ► I can probably just will myself

00:03:05 ◼   ► to not have honey with the tea.

00:03:06 ◼   ► And it turns out I can.

00:03:07 ◼   ► And I did.

00:03:08 ◼   ► And so I don't have honey in my tea anymore.

00:03:10 ◼   ► You'll have to see it.

00:03:11 ◼   ► If you'd like to see,

00:03:12 ◼   ► if you'd like to ask a question

00:03:14 ◼   ► and see your question be answered

00:03:16 ◼   ► if you watch this on YouTube,

00:03:17 ◼   ► you can go to upgradefeedback.com

00:03:19 ◼   ► and you can send in your question

00:03:21 ◼   ► just like Bruce did.

00:03:24 ◼   ► Just drink some tea.

00:03:25 ◼   ► Should we do some follow-up?

00:03:27 ◼   ► Yeah, let's do it.

00:03:29 ◼   ► We don't have a jingle for this,

00:03:31 ◼   ► but the prompt did so.

00:03:32 ◼   ► Follow-up.

00:03:33 ◼   ► There it is.

00:03:34 ◼   ► Thank you so much.

00:03:34 ◼   ► You've put this in here.

00:03:36 ◼   ► There is a Paramount Plus Sonic logo.

00:03:39 ◼   ► That's the follow-up.

00:03:39 ◼   ► There is a Paramount Plus Sonic logo.

00:03:41 ◼   ► So memorable that I forgot that it existed.

00:03:44 ◼   ► The challenge here is some,

00:03:45 ◼   ► like Disney Plus plays you the song

00:03:47 ◼   ► when you launch the app,

00:03:50 ◼   ► but most of them it's just a pre-roll.

00:03:53 ◼   ► And Paramount Plus doesn't do it.

00:03:55 ◼   ► So, but it does a pre-roll

00:04:00 ◼   ► and I just forgot.

00:04:01 ◼   ► So here it is.

00:04:02 ◼   ► Whoa, that's dramatic at the end there.

00:04:09 ◼   ► It's got an orchestra hit at the end,

00:04:10 ◼   ► which I really admire.

00:04:11 ◼   ► And it has actually kind of a melody.

00:04:13 ◼   ► I think this is actually a pretty decent thing

00:04:15 ◼   ► because it's not just a,

00:04:16 ◼   ► maybe this is why I didn't think of it.

00:04:18 ◼   ► It's not just a gaseous cloud

00:04:19 ◼   ► with like a throb in the middle of it,

00:04:23 ◼   ► which so many of these things are.

00:04:24 ◼   ► So I don't know.

00:04:26 ◼   ► Hang on a second.

00:04:26 ◼   ► Hang on a second.

00:04:27 ◼   ► Right?

00:04:28 ◼   ► Where it's like a gaseous cloud

00:04:30 ◼   ► with a throb in the middle of it.

00:04:32 ◼   ► Yeah.

00:04:32 ◼   ► That's how we describe these Sonic logo.

00:04:34 ◼   ► That's how I decided to describe it there.

00:04:35 ◼   ► Yeah.

00:04:35 ◼   ► Because there's, right?

00:04:36 ◼   ► There's this like thing

00:04:38 ◼   ► and then there's like a bong

00:04:40 ◼   ► or a woo

00:04:41 ◼   ► or whatever it is,

00:04:43 ◼   ► just some kind of thing in the middle.

00:04:46 ◼   ► Let's move on, Jason Snell.

00:04:48 ◼   ► Do, do, do, do, do, do, do.

00:04:49 ◼   ► Bing!

00:04:50 ◼   ► Yeah.

00:04:51 ◼   ► All right.

00:04:52 ◼   ► Anyway, I had to give some audio follow-up on that one.

00:04:55 ◼   ► So I am happy that I did it.

00:04:57 ◼   ► Get on the right side of the law

00:05:03 ◼   ► with Lawyer Up.

00:05:05 ◼   ► Gosh, those horns are aggressive.

00:05:09 ◼   ► I know.

00:05:10 ◼   ► I love everything about them.

00:05:12 ◼   ► I've forgotten about the aggressive horns.

00:05:14 ◼   ► Apple has officially filed their response

00:05:16 ◼   ► to the U.S. Department of Justice's lawsuit

00:05:19 ◼   ► against their claim

00:05:20 ◼   ► that the company is a monopoly power in smartphones.

00:05:22 ◼   ► They kind of have five points

00:05:25 ◼   ► and I think these are the five points

00:05:26 ◼   ► that the DOJ made

00:05:27 ◼   ► and Apple have made kind of five points of their own.

00:05:30 ◼   ► I want to kind of just summarize their points

00:05:33 ◼   ► because it's like very legally.

00:05:34 ◼   ► So they say that super apps

00:05:37 ◼   ► do exist on the App Store.

00:05:39 ◼   ► So that's not a bad thing

00:05:41 ◼   ► that they block super apps.

00:05:43 ◼   ► A lot of the discourse when this got filed

00:05:45 ◼   ► was people pointing out

00:05:45 ◼   ► that some of these arguments seem strange

00:05:47 ◼   ► because it seems like Apple

00:05:48 ◼   ► either never outlawed them

00:05:50 ◼   ► or had recently stopped outlawing them.

00:05:53 ◼   ► And so it's very funny here

00:05:57 ◼   ► that most of...

00:05:58 ◼   ► I mean, Apple's responding in a way

00:05:59 ◼   ► that I think a lot of us did

00:06:01 ◼   ► which is it felt like that

00:06:02 ◼   ► the DOJ's filing was a little bit out of time

00:06:06 ◼   ► in that they had done these five things

00:06:08 ◼   ► four of which they weren't doing anymore.

00:06:12 ◼   ► if they had ever done them, but yeah.

00:06:14 ◼   ► There was something like that

00:06:15 ◼   ► but for example,

00:06:16 ◼   ► this one with the super apps thing,

00:06:18 ◼   ► Apple made a guideline change a month later

00:06:21 ◼   ► that would allow them.

00:06:23 ◼   ► So the DOJ suit was filed in March of 2024

00:06:29 ◼   ► and then in April of 2024,

00:06:31 ◼   ► Apple allowed for mini games and mini apps

00:06:34 ◼   ► to be in the App Store.

00:06:36 ◼   ► Yeah, but I think also

00:06:37 ◼   ► if I recall correctly,

00:06:39 ◼   ► there were also a couple examples

00:06:40 ◼   ► in other countries

00:06:41 ◼   ► where there were super apps

00:06:43 ◼   ► that were actually in the App Store.

00:06:45 ◼   ► Yes.

00:06:45 ◼   ► Like in Singapore, I want to say.

00:06:47 ◼   ► Oh, there were ever...

00:06:48 ◼   ► Like in Asia, like everywhere,

00:06:49 ◼   ► like WeChat, Line.

00:06:50 ◼   ► Yeah, super apps.

00:06:51 ◼   ► They exist,

00:06:53 ◼   ► but it's one of these things

00:06:54 ◼   ► it's like they exist

00:06:55 ◼   ► but technically breaking the guidelines?

00:06:57 ◼   ► Technically not allowed,

00:06:58 ◼   ► but they have to be there

00:07:00 ◼   ► because you can't not have Line.

00:07:01 ◼   ► So then Apple changed the guidelines

00:07:03 ◼   ► which is a theme of...

00:07:05 ◼   ► Yes, it is a recurring theme.

00:07:06 ◼   ► They say that they do in fact

00:07:08 ◼   ► allow game streaming apps

00:07:09 ◼   ► but they didn't at the time.

00:07:11 ◼   ► They didn't.

00:07:11 ◼   ► But they have since.

00:07:12 ◼   ► They say that third-party messaging apps

00:07:15 ◼   ► are widely available

00:07:16 ◼   ► and Apple is not degrading them.

00:07:18 ◼   ► Yeah, that was always kind of a dumb one.

00:07:21 ◼   ► Yeah, that one doesn't make any sense.

00:07:22 ◼   ► They say that third-party smartwatches

00:07:25 ◼   ► do have access to data

00:07:26 ◼   ► especially when paired with a companion app

00:07:28 ◼   ► and that they can share some functionality

00:07:31 ◼   ► that Apple has developed

00:07:33 ◼   ► and they are continuing to expand features

00:07:35 ◼   ► to make this work better.

00:07:37 ◼   ► This is the one...

00:07:39 ◼   ► Yeah, this is the one

00:07:40 ◼   ► where they're kind of full of it.

00:07:41 ◼   ► This is...

00:07:42 ◼   ► You know, they want to put up

00:07:43 ◼   ► their strongest argument

00:07:44 ◼   ► but I think Eric Pebble

00:07:46 ◼   ► did the best job

00:07:47 ◼   ► on like listing off all the ways

00:07:49 ◼   ► that the Pebble was not going to work

00:07:50 ◼   ► on the iPhone

00:07:51 ◼   ► like it works on Android

00:07:52 ◼   ► and that's because Apple withholds

00:07:54 ◼   ► all these things

00:07:54 ◼   ► that the Apple Watch can do

00:07:56 ◼   ► that other smartwatches cannot do.

00:07:58 ◼   ► And this isn't just smartwatches either, right?

00:08:01 ◼   ► It's like a whole category

00:08:03 ◼   ► of wearable devices.

00:08:04 ◼   ► Fitness trackers

00:08:06 ◼   ► and yeah, all sorts of stuff

00:08:07 ◼   ► that don't have the same access

00:08:09 ◼   ► that the Apple product does.

00:08:10 ◼   ► The Meta Ray-Bans

00:08:11 ◼   ► like they work way better on Android

00:08:14 ◼   ► than they do on the iPhone.

00:08:15 ◼   ► In fact, Apple's response here

00:08:18 ◼   ► so you summarized it

00:08:19 ◼   ► as they are continuing

00:08:20 ◼   ► to expand the features.

00:08:21 ◼   ► I read this as

00:08:22 ◼   ► yeah, but we got some of it

00:08:24 ◼   ► and we're working on it.

00:08:25 ◼   ► like that was sort of

00:08:26 ◼   ► what they're saying.

00:08:27 ◼   ► Get off our back about it.

00:08:28 ◼   ► We're working on it.

00:08:30 ◼   ► I'm working on it here.

00:08:31 ◼   ► So yeah.

00:08:32 ◼   ► They also say

00:08:33 ◼   ► that they are not holding back

00:08:35 ◼   ► digital wallet

00:08:35 ◼   ► and tap-to-pay functionality

00:08:37 ◼   ► from the NFC chip

00:08:38 ◼   ► and again

00:08:39 ◼   ► they like

00:08:40 ◼   ► five months later

00:08:42 ◼   ► had a press release.

00:08:43 ◼   ► So here's my question.

00:08:44 ◼   ► If the Department of Justice

00:08:46 ◼   ► sues you

00:08:47 ◼   ► over something

00:08:48 ◼   ► and then

00:08:50 ◼   ► you

00:08:51 ◼   ► change your behavior

00:08:51 ◼   ► change a bunch of things.

00:08:54 ◼   ► I mean

00:08:55 ◼   ► we don't

00:08:55 ◼   ► I mean

00:08:55 ◼   ► I guess you probably don't know.

00:08:56 ◼   ► We're going to have to get the lawyers in here

00:08:58 ◼   ► but

00:08:58 ◼   ► Because it's like

00:08:59 ◼   ► if I stole a bunch of stuff

00:09:02 ◼   ► and then

00:09:03 ◼   ► and then

00:09:04 ◼   ► and then

00:09:04 ◼   ► I was asked to go to court

00:09:06 ◼   ► and then I just gave it back

00:09:07 ◼   ► I still committed

00:09:09 ◼   ► the crime, right?

00:09:10 ◼   ► My feeling here

00:09:12 ◼   ► is that what

00:09:12 ◼   ► is that there are two things

00:09:14 ◼   ► on the line, right?

00:09:15 ◼   ► There's financial penalties

00:09:16 ◼   ► for behavior

00:09:17 ◼   ► and there's

00:09:18 ◼   ► demand to change behavior

00:09:21 ◼   ► and

00:09:22 ◼   ► and I feel like

00:09:23 ◼   ► what Apple's doing here

00:09:24 ◼   ► is saying

00:09:24 ◼   ► we've changed our behavior

00:09:26 ◼   ► so these

00:09:26 ◼   ► these changes aren't relevant

00:09:28 ◼   ► and I think what they're arguing is

00:09:29 ◼   ► don't

00:09:30 ◼   ► we don't need

00:09:32 ◼   ► to be forced

00:09:33 ◼   ► by the court

00:09:33 ◼   ► to change our behavior

00:09:34 ◼   ► because we changed our behavior

00:09:36 ◼   ► and we'll see how that plays

00:09:38 ◼   ► but

00:09:38 ◼   ► I do think

00:09:39 ◼   ► the other part of this is

00:09:40 ◼   ► Apple could be fined

00:09:42 ◼   ► for their previous behavior

00:09:44 ◼   ► right?

00:09:44 ◼   ► There could be a fine

00:09:45 ◼   ► based on their previous behavior

00:09:47 ◼   ► but their behavior has changed

00:09:49 ◼   ► so that

00:09:50 ◼   ► that isn't

00:09:51 ◼   ► you know

00:09:51 ◼   ► maybe it isn't as severe

00:09:52 ◼   ► or whatever

00:09:53 ◼   ► or maybe

00:09:53 ◼   ► they get fined

00:09:54 ◼   ► but they don't

00:09:55 ◼   ► and

00:09:55 ◼   ► and if this leads to a settlement

00:09:57 ◼   ► I mean

00:09:57 ◼   ► Apple's argument here

00:09:58 ◼   ► is very much like

00:09:59 ◼   ► we

00:10:00 ◼   ► don't tell us what to do

00:10:02 ◼   ► because we're already doing everything

00:10:03 ◼   ► and then

00:10:05 ◼   ► you know

00:10:05 ◼   ► maybe they write them a check

00:10:06 ◼   ► and then they're done

00:10:07 ◼   ► we'll see

00:10:08 ◼   ► but

00:10:09 ◼   ► I think

00:10:09 ◼   ► I think

00:10:10 ◼   ► this

00:10:10 ◼   ► this response

00:10:11 ◼   ► it's Apple

00:10:12 ◼   ► right?

00:10:12 ◼   ► And

00:10:12 ◼   ► and there

00:10:13 ◼   ► I saw some

00:10:13 ◼   ► hilarious analysis

00:10:14 ◼   ► where people are like

00:10:15 ◼   ► there's a paragraph

00:10:16 ◼   ► where

00:10:17 ◼   ► the DOJ

00:10:18 ◼   ► has listed facts

00:10:20 ◼   ► about Apple

00:10:20 ◼   ► like literally

00:10:21 ◼   ► Apple makes these products

00:10:23 ◼   ► and

00:10:24 ◼   ► the Apple response is

00:10:25 ◼   ► Apple denies all allegations

00:10:27 ◼   ► about this

00:10:28 ◼   ► it's like

00:10:28 ◼   ► you deny

00:10:29 ◼   ► statements of fact

00:10:31 ◼   ► about your company

00:10:32 ◼   ► bananas

00:10:33 ◼   ► so

00:10:34 ◼   ► good

00:10:34 ◼   ► good for you

00:10:35 ◼   ► lawyers

00:10:35 ◼   ► but

00:10:36 ◼   ► but I think that

00:10:37 ◼   ► that it is telling

00:10:38 ◼   ► isn't it

00:10:39 ◼   ► that

00:10:39 ◼   ► as we thought

00:10:40 ◼   ► at the time

00:10:41 ◼   ► and certainly

00:10:42 ◼   ► in the subsequent months

00:10:43 ◼   ► Apple was already

00:10:44 ◼   ► moving in this direction

00:10:45 ◼   ► with a lot of stuff

00:10:46 ◼   ► that the DOJ

00:10:46 ◼   ► was alleging

00:10:47 ◼   ► because of pressure

00:10:48 ◼   ► often from other groups

00:10:50 ◼   ► in other parts of the world

00:10:51 ◼   ► and so

00:10:52 ◼   ► like yeah

00:10:52 ◼   ► but you're right

00:10:53 ◼   ► the question here is

00:10:55 ◼   ► is this enough?

00:10:58 ◼   ► is getting sued

00:10:59 ◼   ► and Apple going

00:11:00 ◼   ► oh no

00:11:00 ◼   ► sorry

00:11:01 ◼   ► we fixed it

00:11:02 ◼   ► we're working on it

00:11:03 ◼   ► is that enough

00:11:04 ◼   ► or not?

00:11:05 ◼   ► I wonder

00:11:06 ◼   ► I don't really know

00:11:07 ◼   ► obviously I have no idea

00:11:08 ◼   ► I don't really know

00:11:09 ◼   ► where this case is going to

00:11:10 ◼   ► end up

00:11:11 ◼   ► I do want

00:11:12 ◼   ► here's my conspiracy

00:11:13 ◼   ► theory

00:11:14 ◼   ► for you here

00:11:15 ◼   ► I love conspiracy theories

00:11:16 ◼   ► when it comes to this kind of stuff

00:11:17 ◼   ► so

00:11:18 ◼   ► from here

00:11:19 ◼   ► this case moves to discovery

00:11:21 ◼   ► and discovery

00:11:22 ◼   ► has been really damaging

00:11:24 ◼   ► for tech companies

00:11:25 ◼   ► right

00:11:25 ◼   ► in the last little while

00:11:26 ◼   ► I wonder if

00:11:28 ◼   ► they made some of these changes

00:11:30 ◼   ► because they know

00:11:31 ◼   ► as soon as it gets to discovery phase

00:11:32 ◼   ► it's all going to start to fall apart

00:11:34 ◼   ► like

00:11:35 ◼   ► that there is

00:11:36 ◼   ► conversations

00:11:37 ◼   ► where they're like

00:11:38 ◼   ► by all means

00:11:39 ◼   ► we can never open the NFC

00:11:41 ◼   ► because it will destroy

00:11:42 ◼   ► the benefit of Apple Pay

00:11:44 ◼   ► and so they're like

00:11:45 ◼   ► oh this is going to be busted open

00:11:46 ◼   ► so we should change this

00:11:47 ◼   ► we also don't know

00:11:48 ◼   ► like

00:11:48 ◼   ► this is the Department of Justice

00:11:50 ◼   ► it's not the Department of Justice

00:11:51 ◼   ► that filed the claim

00:11:52 ◼   ► right

00:11:52 ◼   ► it's the Trump Department of Justice

00:11:55 ◼   ► and

00:11:55 ◼   ► is there a great appetite

00:11:57 ◼   ► to

00:11:57 ◼   ► beat Apple up

00:11:59 ◼   ► beat a great American company up

00:12:01 ◼   ► oh yeah

00:12:01 ◼   ► it was the previous administration

00:12:02 ◼   ► right

00:12:03 ◼   ► is what you're saying

00:12:03 ◼   ► over yeah

00:12:04 ◼   ► over something like this

00:12:05 ◼   ► or

00:12:06 ◼   ► or does this lead to a

00:12:08 ◼   ► a

00:12:09 ◼   ► a settlement

00:12:10 ◼   ► of some sort

00:12:11 ◼   ► um

00:12:12 ◼   ► I don't know

00:12:13 ◼   ► money for the library

00:12:14 ◼   ► I don't know how they're feeling about this

00:12:14 ◼   ► oh my god

00:12:15 ◼   ► I'm gonna have money for the library

00:12:16 ◼   ► we'll take care of it

00:12:17 ◼   ► that's all it takes

00:12:20 ◼   ► yeah

00:12:21 ◼   ► president Trump

00:12:23 ◼   ► has announced

00:12:23 ◼   ► that the US

00:12:24 ◼   ► will impose

00:12:25 ◼   ► a 25% tariff

00:12:26 ◼   ► on goods from India

00:12:28 ◼   ► uh

00:12:28 ◼   ► who knows

00:12:30 ◼   ► right

00:12:30 ◼   ► like with the tariff stuff

00:12:31 ◼   ► it's just like

00:12:32 ◼   ► you never really know

00:12:33 ◼   ► you know

00:12:33 ◼   ► Mike

00:12:33 ◼   ► Mike last Thursday

00:12:35 ◼   ► because we're gonna talk about

00:12:35 ◼   ► Apple results in a little bit

00:12:36 ◼   ► last Thursday

00:12:37 ◼   ► Apple kept talking about

00:12:38 ◼   ► well like

00:12:39 ◼   ► we're gonna offer some guidance

00:12:40 ◼   ► but this is only if things don't change

00:12:41 ◼   ► and I woke up the next morning

00:12:43 ◼   ► to headlines

00:12:45 ◼   ► about how things have changed

00:12:46 ◼   ► so yeah

00:12:49 ◼   ► who knows

00:12:50 ◼   ► who knows

00:12:51 ◼   ► the reason we mention this

00:12:52 ◼   ► is because this is now like

00:12:53 ◼   ► a running

00:12:54 ◼   ► uh

00:12:55 ◼   ► question

00:12:55 ◼   ► of like

00:12:56 ◼   ► where and how iPhones

00:12:57 ◼   ► will be made

00:12:58 ◼   ► because

00:12:58 ◼   ► uh

00:13:00 ◼   ► the US government

00:13:01 ◼   ► would love it

00:13:02 ◼   ► if iPhones were made

00:13:03 ◼   ► in America

00:13:04 ◼   ► uh

00:13:05 ◼   ► they would love to bend

00:13:06 ◼   ► the laws of physics

00:13:07 ◼   ► and reality

00:13:07 ◼   ► to make that happen

00:13:08 ◼   ► it's

00:13:09 ◼   ► not gonna happen

00:13:10 ◼   ► um

00:13:11 ◼   ► so

00:13:12 ◼   ► there's a bunch of

00:13:14 ◼   ► tariffs on China

00:13:15 ◼   ► and so Apple

00:13:16 ◼   ► were like

00:13:16 ◼   ► hey we're gonna make

00:13:17 ◼   ► our iPhones

00:13:18 ◼   ► uh

00:13:19 ◼   ► in India

00:13:19 ◼   ► and now

00:13:21 ◼   ► no one

00:13:21 ◼   ► I guess nobody knows

00:13:23 ◼   ► where they're gonna be made

00:13:24 ◼   ► I will say

00:13:24 ◼   ► I was reading about this

00:13:25 ◼   ► I was wondering like

00:13:26 ◼   ► what is the effect

00:13:26 ◼   ► um

00:13:27 ◼   ► and I wanted to see

00:13:28 ◼   ► if anybody had made

00:13:28 ◼   ► any statements

00:13:29 ◼   ► and the best that I could

00:13:30 ◼   ► come up with was

00:13:31 ◼   ► uh

00:13:32 ◼   ► there was a Reuters report

00:13:33 ◼   ► where they were talking

00:13:34 ◼   ► where like

00:13:34 ◼   ► some analysts

00:13:35 ◼   ► were talking to them

00:13:36 ◼   ► about what potentially

00:13:37 ◼   ► might happen

00:13:37 ◼   ► and they said

00:13:38 ◼   ► I want to read this quote

00:13:39 ◼   ► despite the tariffs

00:13:40 ◼   ► manufacturing iPhones

00:13:41 ◼   ► in India

00:13:41 ◼   ► would continue to remain

00:13:43 ◼   ► cost competitive

00:13:43 ◼   ► of expenses

00:13:44 ◼   ► lower than when

00:13:45 ◼   ► Apple began production

00:13:46 ◼   ► there eight years ago

00:13:47 ◼   ► narrowing the cost gap

00:13:49 ◼   ► with China

00:13:50 ◼   ► and Sarva

00:13:51 ◼   ► uh

00:13:52 ◼   ► in the Discord

00:13:52 ◼   ► posted a link

00:13:53 ◼   ► to a story

00:13:54 ◼   ► that points out

00:13:54 ◼   ► that

00:13:55 ◼   ► uh

00:13:56 ◼   ► they

00:13:56 ◼   ► exempted

00:13:58 ◼   ► a bunch of

00:13:58 ◼   ► categories

00:13:59 ◼   ► from tariffs

00:14:01 ◼   ► okay

00:14:02 ◼   ► um

00:14:02 ◼   ► at some point

00:14:03 ◼   ► and that

00:14:03 ◼   ► that

00:14:04 ◼   ► but like

00:14:04 ◼   ► this is the thing

00:14:05 ◼   ► it's like

00:14:05 ◼   ► so does that

00:14:06 ◼   ► exemption continue

00:14:07 ◼   ► even though

00:14:07 ◼   ► there's now a tariff

00:14:08 ◼   ► because the tariff

00:14:09 ◼   ► there's all this

00:14:10 ◼   ► kind of complexity

00:14:10 ◼   ► about like

00:14:11 ◼   ► what's getting tariffed

00:14:12 ◼   ► and what's not

00:14:13 ◼   ► and it's a whole

00:14:14 ◼   ► it's a whole thing

00:14:15 ◼   ► and and Apple

00:14:17 ◼   ► we'll get to it

00:14:17 ◼   ► in a little bit

00:14:18 ◼   ► but like

00:14:18 ◼   ► this is starting

00:14:19 ◼   ► to hit Apple

00:14:19 ◼   ► and Apple

00:14:20 ◼   ► is talking about it

00:14:21 ◼   ► and um

00:14:22 ◼   ► they are careful

00:14:23 ◼   ► to talk about it

00:14:24 ◼   ► in a really kind

00:14:25 ◼   ► of neutral way

00:14:26 ◼   ► of

00:14:27 ◼   ► their headwinds

00:14:28 ◼   ► right

00:14:28 ◼   ► like they're just

00:14:29 ◼   ► it's like

00:14:30 ◼   ► I don't know

00:14:30 ◼   ► where they came from

00:14:31 ◼   ► they just blew

00:14:31 ◼   ► it off the ocean

00:14:32 ◼   ► and we got to

00:14:33 ◼   ► deal with them

00:14:33 ◼   ► right

00:14:33 ◼   ► and that's

00:14:34 ◼   ► which is probably

00:14:35 ◼   ► the smartest way

00:14:35 ◼   ► to deal with that

00:14:36 ◼   ► when you're talking

00:14:37 ◼   ► publicly about

00:14:38 ◼   ► about tariff stuff

00:14:39 ◼   ► but it's uh

00:14:40 ◼   ► it's starting to affect

00:14:41 ◼   ► things I mean

00:14:41 ◼   ► I know a lot

00:14:42 ◼   ► of the Nintendo

00:14:43 ◼   ► stuff is made

00:14:43 ◼   ► in Vietnam

00:14:44 ◼   ► and they just

00:14:45 ◼   ► raised the price

00:14:45 ◼   ► of all the

00:14:46 ◼   ► Nintendo hardware

00:14:47 ◼   ► not the Switch 2

00:14:48 ◼   ► pricing for the

00:14:49 ◼   ► Nintendo Switch 2

00:14:50 ◼   ► system remains unchanged

00:14:52 ◼   ► the accessories

00:14:53 ◼   ► went up again

00:14:54 ◼   ► that's the second

00:14:54 ◼   ► time they've gone up

00:14:55 ◼   ► and all the other

00:14:56 ◼   ► Nintendo stuff

00:14:56 ◼   ► every other Nintendo

00:14:57 ◼   ► thing has gone up

00:14:58 ◼   ► in value

00:14:59 ◼   ► so so

00:15:00 ◼   ► that's interesting

00:15:01 ◼   ► all right

00:15:02 ◼   ► well so it's

00:15:02 ◼   ► so it's everything

00:15:03 ◼   ► but but but

00:15:04 ◼   ► everything else

00:15:05 ◼   ► and we'll see

00:15:05 ◼   ► how it goes

00:15:06 ◼   ► and it's a good

00:15:07 ◼   ► point about like

00:15:07 ◼   ► they got that

00:15:08 ◼   ► exemption right

00:15:09 ◼   ► but that exemption

00:15:09 ◼   ► was always felt

00:15:10 ◼   ► like a for now

00:15:11 ◼   ► exemption right

00:15:12 ◼   ► like it was like

00:15:12 ◼   ► oh yeah who knows

00:15:13 ◼   ► it could be it

00:15:14 ◼   ► could be undone

00:15:15 ◼   ► at any time

00:15:15 ◼   ► and if it gets

00:15:16 ◼   ► undone there's now

00:15:17 ◼   ► a 25% tariff

00:15:19 ◼   ► potentially on goods

00:15:20 ◼   ► from India

00:15:20 ◼   ► so while the

00:15:22 ◼   ► reporting that I'd

00:15:23 ◼   ► read still said

00:15:24 ◼   ► that like the

00:15:25 ◼   ► the previous iPhones

00:15:26 ◼   ► like the iPhones

00:15:27 ◼   ► currently on sale

00:15:28 ◼   ► between I think

00:15:29 ◼   ► like March and

00:15:30 ◼   ► May basically

00:15:31 ◼   ► all came from

00:15:31 ◼   ► India for America

00:15:32 ◼   ► it's gonna be

00:15:33 ◼   ► interesting to see

00:15:34 ◼   ► because I mean

00:15:34 ◼   ► there was also

00:15:35 ◼   ► that reporting a

00:15:35 ◼   ► while ago right

00:15:36 ◼   ► of like they

00:15:37 ◼   ► were struggling

00:15:38 ◼   ► to make newer

00:15:39 ◼   ► products because

00:15:40 ◼   ► all of the

00:15:41 ◼   ► engineers from

00:15:41 ◼   ► China were being

00:15:42 ◼   ► recalled to China

00:15:43 ◼   ► from India

00:15:43 ◼   ► from the Foxconn

00:15:44 ◼   ► factory it's like

00:15:45 ◼   ► I don't even it

00:15:46 ◼   ► would be intriguing

00:15:47 ◼   ► to like where do

00:15:47 ◼   ► the iPhone where

00:15:48 ◼   ► does the iPhone 17

00:15:49 ◼   ► for US customers

00:15:50 ◼   ► actually end up

00:15:51 ◼   ► coming from like

00:15:52 ◼   ► that's gonna be

00:15:53 ◼   ► an interesting

00:15:54 ◼   ► world will there

00:15:55 ◼   ► be there won't

00:15:56 ◼   ► be another okay

00:15:59 ◼   ► so I have a

00:15:59 ◼   ► question for you

00:16:00 ◼   ► the with the

00:16:01 ◼   ► earnings stuff

00:16:02 ◼   ► because it always

00:16:02 ◼   ► works on a little

00:16:03 ◼   ► bit of a delay

00:16:03 ◼   ► the iPhone

00:16:05 ◼   ► earnings is that

00:16:07 ◼   ► the next report

00:16:09 ◼   ► or the one

00:16:10 ◼   ► almost not at

00:16:10 ◼   ► all almost not

00:16:11 ◼   ► at all there

00:16:12 ◼   ► will be there

00:16:13 ◼   ► will be a couple

00:16:14 ◼   ► weeks of iPhone

00:16:15 ◼   ► sales probably in

00:16:16 ◼   ► the next quarter

00:16:17 ◼   ► they will be able

00:16:18 ◼   ► to characterize

00:16:19 ◼   ► and forecast how

00:16:20 ◼   ► iPhone sales are

00:16:21 ◼   ► going because they

00:16:22 ◼   ► will they will

00:16:23 ◼   ► actually announce

00:16:23 ◼   ► that in what

00:16:25 ◼   ► November so

00:16:26 ◼   ► they will they'll

00:16:27 ◼   ► have like six

00:16:28 ◼   ► weeks of sales

00:16:29 ◼   ► data but the

00:16:30 ◼   ► numbers themselves

00:16:31 ◼   ► will only contain

00:16:33 ◼   ► a couple weeks

00:16:34 ◼   ► of sales data

00:16:34 ◼   ► so they'll be

00:16:36 ◼   ► able to

00:16:36 ◼   ► characterize it

00:16:37 ◼   ► but you won't

00:16:37 ◼   ► necessarily see it

00:16:38 ◼   ► in the charts

00:16:39 ◼   ► and as a huge

00:16:40 ◼   ► change until the

00:16:41 ◼   ► holiday quarter

00:16:42 ◼   ► so if there was

00:16:43 ◼   ► a tariff impact

00:16:44 ◼   ► on the iPhone

00:16:45 ◼   ► 17 they would

00:16:47 ◼   ► communicate that

00:16:48 ◼   ► in the next

00:16:49 ◼   ► results call

00:16:51 ◼   ► they might

00:16:52 ◼   ► would be the

00:16:53 ◼   ► expectation

00:16:53 ◼   ► they might

00:16:54 ◼   ► they might

00:16:54 ◼   ► wait and see

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00:18:47 ◼   ► show you support

00:18:48 ◼   ► for the show

00:18:48 ◼   ► our thanks to

00:18:49 ◼   ► squarespace for

00:18:50 ◼   ► their support of

00:18:50 ◼   ► this show and

00:18:51 ◼   ► all of relay

00:18:52 ◼   ► money money money

00:18:56 ◼   ► money who has

00:18:58 ◼   ► all the money

00:18:58 ◼   ► money money money

00:19:01 ◼   ► money who has

00:19:02 ◼   ► all the money

00:19:03 ◼   ► money money money

00:19:05 ◼   ► money who has

00:19:06 ◼   ► all the money

00:19:07 ◼   ► it's apple

00:19:10 ◼   ► they do in fact

00:19:12 ◼   ► have all the

00:19:13 ◼   ► money in fact they

00:19:16 ◼   ► got themselves in

00:19:17 ◼   ► Q3 2025 94

00:19:19 ◼   ► billion dollars of

00:19:20 ◼   ► revenue have they

00:19:21 ◼   ► done a hundred has

00:19:23 ◼   ► that happened before

00:19:23 ◼   ► on on that quarter

00:19:26 ◼   ► no on holiday

00:19:27 ◼   ► quarters absolutely

00:19:27 ◼   ► on holiday

00:19:28 ◼   ► quarters yeah

00:19:29 ◼   ► yeah I'd forgotten

00:19:30 ◼   ► about that yeah

00:19:31 ◼   ► what Dan what Dan

00:19:32 ◼   ► Morin was observing

00:19:32 ◼   ► that I thought was a

00:19:33 ◼   ► really great when we

00:19:34 ◼   ► did this video on

00:19:35 ◼   ► Thursday night after

00:19:36 ◼   ► the results it's on

00:19:37 ◼   ► YouTube people can

00:19:38 ◼   ► watch it watch me

00:19:39 ◼   ► drink tea without

00:19:40 ◼   ► milk is when

00:19:44 ◼   ► when you're boring

00:19:45 ◼   ► quarters are 94 95

00:19:46 ◼   ► billion this was

00:19:47 ◼   ► 94 which is a

00:19:49 ◼   ► record for the

00:19:50 ◼   ► third fiscal quarter

00:19:51 ◼   ► we are perilously

00:19:53 ◼   ► close to Apple

00:19:55 ◼   ► routinely boringly

00:19:57 ◼   ► having hundred

00:19:58 ◼   ► billion dollar

00:19:59 ◼   ► quarters right

00:20:00 ◼   ► just the average

00:20:01 ◼   ► like the app

00:20:02 ◼   ► just just the

00:20:03 ◼   ► regular quarter

00:20:04 ◼   ► yeah and just

00:20:06 ◼   ► just to compare

00:20:07 ◼   ► like a couple

00:20:10 ◼   ► years ago was

00:20:11 ◼   ► 81 right and

00:20:14 ◼   ► this is the it's

00:20:15 ◼   ► this creeping up I

00:20:16 ◼   ► wrote about this on

00:20:17 ◼   ► six colors is like

00:20:17 ◼   ► the ratchet that

00:20:19 ◼   ► like when you're

00:20:21 ◼   ► not noticing

00:20:22 ◼   ► because they're

00:20:22 ◼   ► small amounts

00:20:24 ◼   ► but Apple so huge

00:20:26 ◼   ► now that even

00:20:26 ◼   ► small percentage

00:20:28 ◼   ► increases all add

00:20:29 ◼   ► up and you know

00:20:31 ◼   ► the business just

00:20:32 ◼   ► gets bigger and

00:20:33 ◼   ► bigger and bigger

00:20:34 ◼   ► and it has more

00:20:34 ◼   ► room to spread

00:20:36 ◼   ► because it's

00:20:38 ◼   ► it's so huge

00:20:40 ◼   ► and it's got you

00:20:40 ◼   ► know so many

00:20:41 ◼   ► users who are like

00:20:42 ◼   ► iPhone users and

00:20:43 ◼   ► they always say this

00:20:44 ◼   ► every every quarter

00:20:44 ◼   ► it's like half of

00:20:46 ◼   ► Apple watch buyers

00:20:47 ◼   ► were new to the

00:20:48 ◼   ► Apple watch it's

00:20:49 ◼   ► like well that

00:20:50 ◼   ► seems bananas but

00:20:51 ◼   ► also you have to

00:20:51 ◼   ► keep in mind the

00:20:52 ◼   ► vast number of

00:20:54 ◼   ► iPhone users out

00:20:55 ◼   ► there and most of

00:20:56 ◼   ► them probably haven't

00:20:57 ◼   ► bought an Apple

00:20:57 ◼   ► watch and it's a

00:20:59 ◼   ► natural place for

00:21:01 ◼   ► them to go or

00:21:02 ◼   ► they had a huge

00:21:04 ◼   ► boost in Mac sales

00:21:05 ◼   ► in China and I

00:21:06 ◼   ► thought well that's

00:21:07 ◼   ► another consequence

00:21:08 ◼   ► of you sell a lot

00:21:09 ◼   ► of iPhones in China

00:21:10 ◼   ► and then people need

00:21:11 ◼   ► to buy a computer

00:21:11 ◼   ► and they're like well

00:21:12 ◼   ► I love my iPhone I'm

00:21:13 ◼   ► gonna get an Apple

00:21:14 ◼   ► computer too and they

00:21:16 ◼   ► get a Mac so I

00:21:18 ◼   ► think you see like

00:21:19 ◼   ► when they talk about

00:21:20 ◼   ► their install base

00:21:20 ◼   ► being an all-time

00:21:21 ◼   ► high like this is

00:21:23 ◼   ► one of the ways that

00:21:23 ◼   ► Apple just kind of

00:21:24 ◼   ► keeps increasing its

00:21:25 ◼   ► revenue and just

00:21:26 ◼   ► growing in a way

00:21:28 ◼   ► that is not dramatic

00:21:29 ◼   ► but it just keeps

00:21:30 ◼   ► growing because

00:21:31 ◼   ► there are so in

00:21:33 ◼   ► most in most

00:21:34 ◼   ► product categories

00:21:35 ◼   ► there's plenty of

00:21:36 ◼   ► room for Apple to

00:21:37 ◼   ► sell more products

00:21:38 ◼   ► right like there

00:21:39 ◼   ► there are plenty of

00:21:40 ◼   ► iPhone users who

00:21:41 ◼   ► don't have Apple

00:21:42 ◼   ► watches and don't

00:21:43 ◼   ► have Macs for

00:21:44 ◼   ► example and then

00:21:45 ◼   ► yes there are also

00:21:46 ◼   ► plenty of smartphone

00:21:48 ◼   ► users who don't have

00:21:48 ◼   ► iPhones so that's an

00:21:49 ◼   ► opportunity for them

00:21:50 ◼   ► too but there's lots

00:21:52 ◼   ► of room around the

00:21:52 ◼   ► margins for them to

00:21:53 ◼   ► just keep picking up

00:21:54 ◼   ► selling an additional

00:21:55 ◼   ► product to people who

00:21:56 ◼   ► only have an iPhone

00:21:57 ◼   ► or something like that

00:21:58 ◼   ► I know this like

00:21:59 ◼   ► what you're saying

00:22:00 ◼   ► there is making me

00:22:00 ◼   ► think of a thing

00:22:01 ◼   ► which is obviously

00:22:01 ◼   ► painfully clear but

00:22:04 ◼   ► it's just like

00:22:04 ◼   ► fascinating when you

00:22:06 ◼   ► think of it in these

00:22:06 ◼   ► terms that Dan has

00:22:07 ◼   ► put forward of like

00:22:08 ◼   ► every iPhone customer

00:22:10 ◼   ► will buy another

00:22:11 ◼   ► iPhone right right

00:22:13 ◼   ► and so you're slowly

00:22:16 ◼   ► bringing more people

00:22:17 ◼   ► in yes but then you

00:22:18 ◼   ► just keep selling more

00:22:19 ◼   ► and more iPhones

00:22:20 ◼   ► forever and ever

00:22:21 ◼   ► and ever like you

00:22:22 ◼   ► just keep selling

00:22:23 ◼   ► them like I know

00:22:24 ◼   ► it's such an obvious

00:22:25 ◼   ► point but like when

00:22:26 ◼   ► you put it so clearly

00:22:27 ◼   ► of like why do they

00:22:28 ◼   ► keep making so much

00:22:29 ◼   ► money was because

00:22:30 ◼   ► they bring in more

00:22:30 ◼   ► customers and then

00:22:32 ◼   ► those people will buy

00:22:33 ◼   ► more iPhones and you

00:22:35 ◼   ► just keep getting

00:22:36 ◼   ► bigger and bigger and

00:22:37 ◼   ► bigger forever and a

00:22:39 ◼   ► certain percentage of

00:22:41 ◼   ► people who have an

00:22:41 ◼   ► iPhone will eventually

00:22:43 ◼   ► buy an Apple watch

00:22:44 ◼   ► yes to the point

00:22:46 ◼   ► and the numbers are so

00:22:47 ◼   ► large the numbers are

00:22:48 ◼   ► so large of iPhone

00:22:50 ◼   ► buyers that they can

00:22:51 ◼   ► toss off a figure like

00:22:53 ◼   ► half the Apple watches

00:22:54 ◼   ► we sold last quarter

00:22:55 ◼   ► were to people who had

00:22:56 ◼   ► never bought an Apple

00:22:57 ◼   ► watch before 10

00:22:58 ◼   ► years on they're

00:22:59 ◼   ► still finding an

00:23:01 ◼   ► enormous number of

00:23:02 ◼   ► Apple watch buyers

00:23:03 ◼   ► who are only coming to

00:23:04 ◼   ► the Apple watch now

00:23:05 ◼   ► you know and that's an

00:23:07 ◼   ► iPhone accessory so

00:23:08 ◼   ► they have to be iPhone

00:23:09 ◼   ► users or you'd be

00:23:10 ◼   ► really sad I mean I

00:23:11 ◼   ► guess you could always

00:23:12 ◼   ► buy one but it would

00:23:13 ◼   ► suck yeah it would be

00:23:15 ◼   ► it would be not so

00:23:16 ◼   ► good so so I just think

00:23:19 ◼   ► that that has something

00:23:19 ◼   ► about Apple scale in it

00:23:21 ◼   ► that there are so many

00:23:21 ◼   ► people if you if you

00:23:22 ◼   ► did the math of like

00:23:23 ◼   ► how many people out

00:23:24 ◼   ► there are iPhone users

00:23:26 ◼   ► who haven't bought an

00:23:27 ◼   ► Apple watch yet it would

00:23:28 ◼   ► be an enormous amount

00:23:29 ◼   ► this is what I always say

00:23:29 ◼   ► about the Mac like I

00:23:30 ◼   ► love the Mac but you

00:23:32 ◼   ► have to understand that

00:23:34 ◼   ► if you look at the scale

00:23:35 ◼   ► there are like the

00:23:37 ◼   ► majority of iPhone users

00:23:38 ◼   ► don't have a Mac because

00:23:39 ◼   ► they can't yeah they

00:23:41 ◼   ► can't they're way more

00:23:41 ◼   ► iPhones than Macs in use

00:23:43 ◼   ► right like you can't it

00:23:45 ◼   ► doesn't work that way and

00:23:47 ◼   ► so yeah it's it's a it's

00:23:50 ◼   ► just interesting to see

00:23:51 ◼   ► so and that was just

00:23:52 ◼   ► where my thoughts went

00:23:53 ◼   ► when Dan pointed out

00:23:54 ◼   ► like wow this is a

00:23:54 ◼   ► routine quarter that was

00:23:55 ◼   ► almost a hundred billion

00:23:56 ◼   ► it's like yeah to

00:23:57 ◼   ► illustrate that point of

00:23:59 ◼   ► like the growth and how

00:24:00 ◼   ► it grows faster and

00:24:01 ◼   ► faster so I think part of

00:24:03 ◼   ► the reporting here was

00:24:04 ◼   ► that like Apple was

00:24:05 ◼   ► sharing they've produced

00:24:06 ◼   ► their three billionth

00:24:07 ◼   ► iPhone it was like a

00:24:08 ◼   ► news beat that was I

00:24:09 ◼   ► think around the

00:24:11 ◼   ► earnings right and I've

00:24:12 ◼   ► got a quote from

00:24:13 ◼   ► Allison Johnson's

00:24:14 ◼   ► piece on this on the

00:24:15 ◼   ► verge the iPhone the

00:24:16 ◼   ► original was introduced

00:24:17 ◼   ► in 2007 and the

00:24:19 ◼   ► company reached one

00:24:20 ◼   ► billion iPhones sold

00:24:21 ◼   ► nine years later in

00:24:22 ◼   ► 2016 getting to two

00:24:24 ◼   ► billion took five

00:24:25 ◼   ► years from there it's

00:24:27 ◼   ► been four years to sell

00:24:28 ◼   ► another billion so like

00:24:30 ◼   ► it just keeps increasing

00:24:32 ◼   ► so like in theory they

00:24:34 ◼   ► get to four billion

00:24:35 ◼   ► iPhones in three years

00:24:36 ◼   ► from now and five

00:24:38 ◼   ► billion iPhones in two

00:24:39 ◼   ► years right like it's

00:24:40 ◼   ► just exponentially

00:24:41 ◼   ► growing

00:24:42 ◼   ► infinite iPhones

00:24:43 ◼   ► yeah

00:24:44 ◼   ► yeah yeah I mean this

00:24:45 ◼   ► is the thing because

00:24:46 ◼   ► because even if I

00:24:47 ◼   ► mean there's there's

00:24:48 ◼   ► some reduction because

00:24:49 ◼   ► the cycle has

00:24:50 ◼   ► lengthened but you

00:24:51 ◼   ► also have growth and

00:24:52 ◼   ► as long as you have

00:24:53 ◼   ► growth and you have

00:24:54 ◼   ► renewal of the existing

00:24:55 ◼   ► install base and

00:24:56 ◼   ► they're mostly happy and

00:24:57 ◼   ► they're mostly buying new

00:24:58 ◼   ► iPhones then it just

00:25:00 ◼   ► keeps accelerating and

00:25:02 ◼   ► so yeah they they

00:25:03 ◼   ► announced that on the

00:25:04 ◼   ► analyst call that they

00:25:05 ◼   ► produced their three

00:25:07 ◼   ► billionth iPhone which

00:25:10 ◼   ► Dan and I were

00:25:11 ◼   ► speculating during the

00:25:12 ◼   ► during our video you

00:25:16 ◼   ► know what what happened

00:25:17 ◼   ► to the three billionth

00:25:17 ◼   ► iPhone do they

00:25:18 ◼   ► intercept it or does it

00:25:19 ◼   ► like go out and I

00:25:20 ◼   ► thought like Willy Wonka

00:25:21 ◼   ► like maybe there's like a

00:25:22 ◼   ► golden ticket inside and

00:25:23 ◼   ► you get to come to

00:25:24 ◼   ► Cupertino and buy your

00:25:26 ◼   ► own lunch at Cafe Max or

00:25:27 ◼   ► something like that I

00:25:28 ◼   ► don't know but as we'll

00:25:30 ◼   ► get to in a in a in a

00:25:32 ◼   ► further segment on this

00:25:33 ◼   ► episode there was a like

00:25:34 ◼   ► an all hands the next day

00:25:36 ◼   ► at Apple and Tim Cook

00:25:38 ◼   ► had the three billionth

00:25:38 ◼   ► iPhone oh that's a good

00:25:41 ◼   ► tidbit so they intercepted

00:25:42 ◼   ► it do you reckon that

00:25:44 ◼   ► that that iPhone is now

00:25:45 ◼   ► kept like essentially

00:25:46 ◼   ► Apple have bought that

00:25:47 ◼   ► iPhone and like they're

00:25:48 ◼   ► not actually going to

00:25:49 ◼   ► ship that to a customer I

00:25:50 ◼   ► mean my understanding is

00:25:51 ◼   ► that at the at the all

00:25:52 ◼   ► hands he said what what do

00:25:54 ◼   ► you think we should do

00:25:54 ◼   ► with it

00:25:54 ◼   ► I can't wait to see what

00:25:57 ◼   ► you do with it

00:25:58 ◼   ► it belongs in a museum

00:25:59 ◼   ► I guess so

00:26:01 ◼   ► I guess so

00:26:02 ◼   ► do you remember I just

00:26:05 ◼   ► came up on the on a

00:26:06 ◼   ► quizzes on connected

00:26:07 ◼   ► recently like you're

00:26:08 ◼   ► saying about what do they

00:26:08 ◼   ► do when Apple used to get

00:26:10 ◼   ► to like the billionth song

00:26:12 ◼   ► on iTunes they give like a

00:26:13 ◼   ► $10,000 gift card away

00:26:15 ◼   ► right maybe they should do

00:26:16 ◼   ► that maybe they should put

00:26:17 ◼   ► a $10,000 gift card in

00:26:19 ◼   ► that and put it in a

00:26:20 ◼   ► museum it's like we did

00:26:21 ◼   ► it but no one ever gets

00:26:22 ◼   ► good luck yeah no one no

00:26:23 ◼   ► one gets it but they

00:26:24 ◼   ► intercepted it I think

00:26:25 ◼   ► that's really interesting

00:26:25 ◼   ► they're like we'll take

00:26:26 ◼   ► that we did we dubbed

00:26:27 ◼   ► this one the three

00:26:27 ◼   ► billionth sorry we're

00:26:29 ◼   ► keeping it so the

00:26:30 ◼   ► revenue for the quarter

00:26:31 ◼   ► was at 94 billion

00:26:32 ◼   ► dollars which is up 10

00:26:33 ◼   ► percent year over year

00:26:34 ◼   ► which is quite a big

00:26:35 ◼   ► jump we'll get in I

00:26:36 ◼   ► think and we'll get

00:26:37 ◼   ► into why is a good

00:26:38 ◼   ► reason for this I think

00:26:39 ◼   ► the iPhone is 44.6

00:26:42 ◼   ► billion dollars up

00:26:43 ◼   ► 13 percent year over

00:26:44 ◼   ► year the Mac was eight

00:26:46 ◼   ► billion dollars up 15

00:26:47 ◼   ► percent year over year

00:26:48 ◼   ► so this is the reason

00:26:50 ◼   ► right iPhone a Mac and

00:26:52 ◼   ► it was mentioned that a

00:26:53 ◼   ► lot of this was what do

00:26:54 ◼   ► they call it pull

00:26:55 ◼   ► forward because people

00:26:56 ◼   ► were worried about

00:26:56 ◼   ► tariffs

00:26:57 ◼   ► yeah so in starting in

00:27:00 ◼   ► April Apple stores got

00:27:02 ◼   ► busy because people

00:27:03 ◼   ► started buying and so

00:27:04 ◼   ► there's a feeling that

00:27:04 ◼   ► there's an accelerated

00:27:05 ◼   ► cycle caused by tariffs

00:27:07 ◼   ► for fear that Apple is

00:27:09 ◼   ► going to raise its

00:27:09 ◼   ► prices which hasn't

00:27:10 ◼   ► happened but there's

00:27:12 ◼   ► that feeling that in

00:27:13 ◼   ► the US in iPhone and

00:27:16 ◼   ► Mac they saw extra

00:27:18 ◼   ► sales that would have

00:27:20 ◼   ► otherwise happened

00:27:20 ◼   ► later because people

00:27:22 ◼   ► are like oh well maybe

00:27:23 ◼   ► I should buy a new

00:27:25 ◼   ► computer now and I

00:27:27 ◼   ► heard that from you

00:27:28 ◼   ► know I've heard that

00:27:29 ◼   ► just anecdotally from

00:27:30 ◼   ► people in my life where

00:27:31 ◼   ► they're like oh yeah

00:27:32 ◼   ► maybe I should just get

00:27:33 ◼   ► one now I'm thinking

00:27:34 ◼   ► about it and that's

00:27:36 ◼   ► really what happens is

00:27:36 ◼   ► like you hear about the

00:27:37 ◼   ► tariffs and you're like

00:27:38 ◼   ► oh prices may be going

00:27:38 ◼   ► up and you're like

00:27:39 ◼   ► yeah I've been putting

00:27:40 ◼   ► off I've been pondering

00:27:41 ◼   ► whether I should buy a

00:27:42 ◼   ► new laptop in the next

00:27:43 ◼   ► year maybe I should just

00:27:44 ◼   ► pull the trigger now and

00:27:45 ◼   ► some percentage you know

00:27:47 ◼   ► 10% or something I think

00:27:48 ◼   ► they said of their sales

00:27:50 ◼   ► were like that so yeah

00:27:51 ◼   ► so this would have been a

00:27:53 ◼   ► very different quarter

00:27:53 ◼   ► wouldn't it it would not

00:27:55 ◼   ► have been so dramatic

00:27:56 ◼   ► well it's 10% of sales I

00:27:59 ◼   ► mean in in remember this

00:28:00 ◼   ► is a US only thing and

00:28:02 ◼   ► the US is the biggest

00:28:02 ◼   ► market but they had

00:28:05 ◼   ► success across the world

00:28:06 ◼   ► so it would have been

00:28:08 ◼   ► slightly less dramatic but

00:28:10 ◼   ► I think it would have

00:28:11 ◼   ► still been more or less

00:28:12 ◼   ► what it was I don't think

00:28:14 ◼   ► it's a I think maybe for

00:28:15 ◼   ► the Mac if the pull forward

00:28:16 ◼   ► only happened in the US

00:28:18 ◼   ► well they specifically they

00:28:19 ◼   ► specifically said it was

00:28:21 ◼   ► only in the US hmm I

00:28:23 ◼   ► wonder because I mean not

00:28:25 ◼   ► to the same level but I

00:28:26 ◼   ► just want people in the

00:28:27 ◼   ► UK worried I mean

00:28:29 ◼   ► nowhere else is affected

00:28:30 ◼   ► by US tariffs it's the

00:28:31 ◼   ► US you say that you're

00:28:33 ◼   ► correct but I don't think

00:28:35 ◼   ► it's necessarily how

00:28:36 ◼   ► people think like their

00:28:38 ◼   ► news is just full up of

00:28:40 ◼   ► people telling them that

00:28:41 ◼   ► tariffs are going to be on

00:28:42 ◼   ► their products and I'm

00:28:43 ◼   ► not really sure that

00:28:44 ◼   ► necessarily is fully

00:28:45 ◼   ► understood I could be

00:28:46 ◼   ► completely wrong I'm just

00:28:47 ◼   ► pulling this out of

00:28:48 ◼   ► nowhere Apple specifically

00:28:49 ◼   ► said they saw Mac and

00:28:50 ◼   ► iPhone in in the US

00:28:53 ◼   ► oh I don't doubt that

00:28:54 ◼   ► don't know that at all

00:28:54 ◼   ► the iPad did not get

00:28:57 ◼   ► this six point six

00:28:58 ◼   ► billion dollars down

00:28:59 ◼   ► eight percent year over

00:29:00 ◼   ► year yeah tough compare

00:29:01 ◼   ► as they say because they

00:29:03 ◼   ► released new iPads last

00:29:04 ◼   ► year in this quarter and

00:29:05 ◼   ► they didn't this time

00:29:06 ◼   ► the iPad pro and what

00:29:08 ◼   ► the iPad iPad maybe

00:29:10 ◼   ► came out when they have

00:29:13 ◼   ► this time last year do

00:29:14 ◼   ► they call them easy

00:29:15 ◼   ► compares or like

00:29:16 ◼   ► favorable compares

00:29:17 ◼   ► because they know they

00:29:18 ◼   ► just say we killed it

00:29:19 ◼   ► they just say we killed

00:29:20 ◼   ► it we killed it what are

00:29:22 ◼   ► we supposed to do yeah

00:29:24 ◼   ► we can't choose when we

00:29:25 ◼   ► release products they just

00:29:26 ◼   ► happen I don't know

00:29:27 ◼   ► right well I noticed this

00:29:29 ◼   ► time that when Tim spoke at

00:29:30 ◼   ► the very top of the call

00:29:32 ◼   ► he was like crowing about

00:29:34 ◼   ► the categories that were up

00:29:36 ◼   ► by a percentage and then

00:29:38 ◼   ► when the when he gets to

00:29:38 ◼   ► iPad he just doesn't

00:29:39 ◼   ► mention it he just says oh

00:29:41 ◼   ► iPad made this revenue and

00:29:43 ◼   ► it was great and and just

00:29:45 ◼   ► and and doesn't do the

00:29:46 ◼   ► doesn't say down and then

00:29:48 ◼   ► the Kevin Parick the CFO

00:29:49 ◼   ► follows him up and and

00:29:51 ◼   ► goes through the

00:29:51 ◼   ► categories again in more

00:29:52 ◼   ► detail and he's the one

00:29:54 ◼   ► who has to say it was

00:29:55 ◼   ► down that's that's iPad

00:29:57 ◼   ► revenue was down 8% year

00:29:59 ◼   ► over year due to a tough

00:30:00 ◼   ► compare uh he throws that

00:30:01 ◼   ► all in there but Tim is

00:30:03 ◼   ► Mr. Good News he's Mr.

00:30:04 ◼   ► Happy News uh wearable

00:30:07 ◼   ► home and accessories is at

00:30:08 ◼   ► 7.4 billion dollars down

00:30:10 ◼   ► 9% year over year category

00:30:13 ◼   ► that was rocketing for quite

00:30:14 ◼   ► a while and has been in the

00:30:16 ◼   ► doldrums for two and a

00:30:18 ◼   ► half three years now um

00:30:21 ◼   ► what's going on this is the

00:30:22 ◼   ► Apple Watch category and

00:30:24 ◼   ► AirPods but it's this is

00:30:26 ◼   ► well that's what I'm saying

00:30:27 ◼   ► this is the Apple Watch

00:30:27 ◼   ► category it's the Vision

00:30:28 ◼   ► Pro category but I think

00:30:31 ◼   ► it's the AirPods category

00:30:32 ◼   ► and that the AirPods Pro is

00:30:34 ◼   ► the winning product in this

00:30:35 ◼   ► category and they haven't

00:30:37 ◼   ► released a new version of

00:30:38 ◼   ► the AirPods Pro in quite a

00:30:39 ◼   ► while and let's you know

00:30:42 ◼   ► again it's a composite

00:30:46 ◼   ► category this is a category

00:30:47 ◼   ► that was called other

00:30:48 ◼   ► before so it is what it is

00:30:50 ◼   ► it's a whole bunch of stuff

00:30:51 ◼   ► it's accessories they

00:30:52 ◼   ► mentioned accessories revenue

00:30:53 ◼   ► was a tough compare in part

00:30:55 ◼   ► because the iPad came out

00:30:56 ◼   ► last year and you're like

00:30:57 ◼   ► wait what but the answer is

00:30:59 ◼   ► like Apple Pencil Magic

00:31:01 ◼   ► Keyboard there's so many

00:31:02 ◼   ► accessories that go along

00:31:03 ◼   ► with a new iPad and those

00:31:05 ◼   ► don't fall in the iPad line

00:31:06 ◼   ► they fall in the wearables

00:31:07 ◼   ► home accessories line and so

00:31:09 ◼   ► that makes it a tough

00:31:10 ◼   ► compare too but this is just

00:31:11 ◼   ► this this category has

00:31:12 ◼   ► gotten punched the last

00:31:14 ◼   ► two or three years and I

00:31:15 ◼   ► think it's a combination of

00:31:17 ◼   ► things but I keep coming

00:31:18 ◼   ► back to the AirPods like

00:31:19 ◼   ► they're wildly successful I

00:31:21 ◼   ► feel like AirPods Pro 2 is

00:31:23 ◼   ► the flagship of this entire

00:31:24 ◼   ► category and where is

00:31:27 ◼   ► AirPods Pro 3 probably this

00:31:29 ◼   ► fall I think that will be

00:31:30 ◼   ► really good for this

00:31:30 ◼   ► category but you know it

00:31:32 ◼   ► it also once you have that

00:31:33 ◼   ► explosive growth and you get

00:31:35 ◼   ► up to 15 billion in a

00:31:36 ◼   ► quarter you know I think

00:31:39 ◼   ► it's hard to sustain that

00:31:41 ◼   ► right it's hard to sustain

00:31:42 ◼   ► that and so there's just a

00:31:43 ◼   ► little bit of a letdown

00:31:44 ◼   ► happening here

00:31:45 ◼   ► yeah the AirPods Pro 2

00:31:48 ◼   ► were released in September

00:31:50 ◼   ► of 2022

00:31:51 ◼   ► and yeah the product category

00:31:55 ◼   ► has been down

00:31:56 ◼   ► from actually it was it went

00:32:00 ◼   ► up 10% for that quarter and

00:32:02 ◼   ► then it's been down since

00:32:03 ◼   ► and then it's been down ever

00:32:04 ◼   ► since yeah yeah we'll see I

00:32:06 ◼   ► mean some of it is probably

00:32:07 ◼   ► inflation of Apple Watch sales

00:32:10 ◼   ► and all sorts of other

00:32:10 ◼   ► things I I don't doubt that

00:32:12 ◼   ► this is a complicated

00:32:12 ◼   ► category but it also is a

00:32:14 ◼   ► category that had a huge

00:32:16 ◼   ► amount of growth and looked

00:32:17 ◼   ► like it was going to be a big

00:32:18 ◼   ► growth potential category for

00:32:19 ◼   ► Apple and instead it looks

00:32:21 ◼   ► like it found its level or

00:32:23 ◼   ► it overshot its level a little

00:32:24 ◼   ► bit and has come back I think

00:32:26 ◼   ► my guess is what happened was

00:32:28 ◼   ► that was the popularity of

00:32:29 ◼   ► AirPods taking off right and

00:32:32 ◼   ► now it's there and now it's

00:32:33 ◼   ► there and so it just goes up

00:32:35 ◼   ► and down now depending on yeah it

00:32:36 ◼   ► reminds me of the iPad in a way

00:32:38 ◼   ► right where like the iPad

00:32:39 ◼   ► initially saw so much growth and

00:32:42 ◼   ► then it stopped and I think

00:32:44 ◼   ► AirPods could be a similar thing

00:32:46 ◼   ► where like they had a real

00:32:47 ◼   ► moment and now they're just a

00:32:49 ◼   ► product that people have and it's

00:32:50 ◼   ► not like going to find a bunch

00:32:52 ◼   ► more new people all of a sudden

00:32:53 ◼   ► the truth about product cycles

00:32:55 ◼   ► outside the context of a Wall

00:32:59 ◼   ► Street analyst is the like the I the

00:33:04 ◼   ► iPad everybody was like oh boy

00:33:06 ◼   ► this is going to be huge because

00:33:08 ◼   ► there was this huge initial

00:33:09 ◼   ► interest right but you know that's

00:33:11 ◼   ► not how reality works it actually

00:33:13 ◼   ► it found its audience they sold

00:33:15 ◼   ► all of them and then they all kept

00:33:17 ◼   ► their iPads for five years and so it

00:33:19 ◼   ► looked like there was this initial

00:33:21 ◼   ► surge and then it fell off a cliff

00:33:22 ◼   ► and was dead that's not actually

00:33:25 ◼   ► what happened what happened is

00:33:26 ◼   ► everybody who wanted an iPad bought

00:33:27 ◼   ► one and then they didn't need a new

00:33:29 ◼   ► iPad for five years correct and then

00:33:32 ◼   ► and because the iPad has proved to

00:33:34 ◼   ► be a pretty reliable business for

00:33:35 ◼   ► Apple but that can get washed out in

00:33:38 ◼   ► the excitement where people are

00:33:39 ◼   ► like oh my god it's growing so fast

00:33:41 ◼   ► we got to invest in Apple now and

00:33:42 ◼   ► then oh no the year over year is

00:33:44 ◼   ► down we've got to get out it's a

00:33:45 ◼   ► flop and like that is all that is

00:33:48 ◼   ► true but I think it misses the point

00:33:50 ◼   ► sometimes of what's going on in a

00:33:51 ◼   ► product category I think you're

00:33:52 ◼   ► right and services is at 27.4

00:33:57 ◼   ► billion up quite a substantial 13

00:33:59 ◼   ► percent year over year yep who

00:34:02 ◼   ► knows why right like who knows

00:34:05 ◼   ► severance no probably not right no

00:34:09 ◼   ► it's I mean look it's services has

00:34:12 ◼   ► been up double digits low double

00:34:15 ◼   ► digits every quarter for the last

00:34:18 ◼   ► what two years there was before that

00:34:25 ◼   ► there was a period of enormous growth

00:34:27 ◼   ► and then a year where it was single

00:34:30 ◼   ► digit growth mostly because they I

00:34:34 ◼   ► think it tough compare as I would say

00:34:36 ◼   ► it would because you follow

00:34:38 ◼   ► exponential growth with not

00:34:39 ◼   ► exponential growth and it looks bad

00:34:41 ◼   ► even though that's not necessarily

00:34:42 ◼   ► that but like yeah for two years now

00:34:45 ◼   ► they have they have tuned the the

00:34:46 ◼   ► services engine where you know I I

00:34:50 ◼   ► guess the average for the last two

00:34:51 ◼   ► years it's probably like 12 or 13

00:34:53 ◼   ► percent growth year over year per

00:34:54 ◼   ► quarter it's it's pretty amazing and

00:34:57 ◼   ► they haven't they haven't even been

00:34:58 ◼   ► down sequentially in like three

00:35:00 ◼   ► years in one quarter like they just

00:35:02 ◼   ► it number goes up like they say

00:35:04 ◼   ► forever yeah there's some interesting

00:35:08 ◼   ► stuff it's interesting quotes uh from

00:35:10 ◼   ► the earnings call uh thank you to

00:35:13 ◼   ► jason and doing a service to the

00:35:15 ◼   ► entire blogosphere by transcribing the

00:35:18 ◼   ► call um cfo kevin parak says as we

00:35:24 ◼   ► move into the september quarter i'd like

00:35:26 ◼   ► to review our outlook importantly the

00:35:28 ◼   ► color we're providing assumes that the

00:35:30 ◼   ► global tariff rates policies and

00:35:31 ◼   ► application remain in effect as of this

00:35:33 ◼   ► call the global macroeconomic outlook

00:35:36 ◼   ► does not worsen from today and the

00:35:38 ◼   ► current revenue share agreement with

00:35:40 ◼   ► google continues that last part is the

00:35:43 ◼   ► important part i bet that yeah because i

00:35:46 ◼   ► can imagine there is some element some

00:35:49 ◼   ► version of this that always occurs right

00:35:51 ◼   ► which is like a similar thing of like yes

00:35:53 ◼   ► oh we're going to see what those trade

00:35:55 ◼   ► winds are doing and you know forex and

00:35:57 ◼   ► all that stuff yep yep they they talk

00:36:00 ◼   ► about a lot of that stuff right the the

00:36:02 ◼   ► the the financial uh headwinds uh and how

00:36:07 ◼   ► they face them in various ways but that

00:36:08 ◼   ► last item of like oh yeah i'm you know

00:36:11 ◼   ► y'all know about that rev share deal with

00:36:12 ◼   ► google because we don't stop talking

00:36:14 ◼   ► about it so you must know about it like

00:36:16 ◼   ► you understand you get it right but

00:36:18 ◼   ► they're always talking about you know

00:36:20 ◼   ► but i don't think they've ever called

00:36:21 ◼   ► it out in a call before as a as a real

00:36:24 ◼   ► serious threat to their revenue

00:36:25 ◼   ► but it is and it is it is because that's

00:36:29 ◼   ► an enormous amount of money and it's all

00:36:31 ◼   ► profit yep which means it's not just a

00:36:34 ◼   ► hit to your revenue it's a hit to your

00:36:36 ◼   ► margins um it's a hit to your profit

00:36:39 ◼   ► it's a it's a big deal now you know

00:36:43 ◼   ► totally separate conversation but i believe

00:36:45 ◼   ► that that it doesn't go to zero if the if

00:36:48 ◼   ► something like this happens but it

00:36:49 ◼   ► certainly would be a tumultuous moment

00:36:51 ◼   ► and apple would have to scramble to

00:36:53 ◼   ► replace some of that revenue um but yeah

00:36:56 ◼   ► like uh i mean this says it all like

00:36:59 ◼   ► tariffs are an issue and the global

00:37:03 ◼   ► macroeconomic outlook is an issue and what

00:37:07 ◼   ► happens with google is an issue and these

00:37:08 ◼   ► are these are the big threats that apple

00:37:10 ◼   ► sees in terms of their forecast for the

00:37:12 ◼   ► next quarter i mean we just spent a few

00:37:14 ◼   ► minutes talking about the reliability and

00:37:16 ◼   ► you and you're saying apple tuning the

00:37:18 ◼   ► services segment so that it keeps

00:37:21 ◼   ► throwing out these low double digit

00:37:23 ◼   ► numbers meanwhile this is where the

00:37:25 ◼   ► google thing hits and how much of an

00:37:27 ◼   ► impact is it do we see a decline do we

00:37:29 ◼   ► see a it get cut in half like there is

00:37:33 ◼   ► going to be an impact i agree with what

00:37:35 ◼   ► you're saying they will find a way to

00:37:36 ◼   ► fill it but i don't think that's going

00:37:39 ◼   ► to be an immediate thing that they're

00:37:41 ◼   ► able to do no no it's going to take it's

00:37:43 ◼   ► going to take time and it's probably not

00:37:44 ◼   ► going to measure up i think those things

00:37:46 ◼   ► are both true and so you know like that

00:37:48 ◼   ► that is going to be if this happens this

00:37:53 ◼   ► that will be a very dramatic earnings call

00:37:55 ◼   ► because you know we said it certainly is

00:37:58 ◼   ► so the services is like this is the what

00:38:02 ◼   ► the stock market loves to see it's the

00:38:04 ◼   ► infinite growth segment which look i mean

00:38:07 ◼   ► oh i think in time we've maybe lost

00:38:10 ◼   ► track

00:38:11 ◼   ► services is 29 percent of apple's revenue

00:38:16 ◼   ► now

00:38:16 ◼   ► yes like it was small at first so it's

00:38:21 ◼   ► essentially 30 percent and the iphone is

00:38:23 ◼   ► just over 45

00:38:24 ◼   ► yeah it's a huge it's a huge portion of

00:38:27 ◼   ► of what they do although i will say the

00:38:30 ◼   ► good thing about growing services is that

00:38:33 ◼   ► the percentage of google referral money

00:38:36 ◼   ► that's part of the services line is much

00:38:39 ◼   ► less than it used to be

00:38:40 ◼   ► maybe still i think so i don't think i

00:38:45 ◼   ► don't think that the google search revenue

00:38:46 ◼   ► has grown

00:38:47 ◼   ► at the pace of the category is my my gut

00:38:51 ◼   ► feeling is that it's probably shown some

00:38:54 ◼   ► growth but and and right it may even be

00:38:56 ◼   ► static or down now but that apple has

00:38:59 ◼   ► built so much uh around it in terms of

00:39:02 ◼   ► other services revenue the other thing i

00:39:04 ◼   ► wanted to say about this and i did i did

00:39:06 ◼   ► mention this on the youtube stream with

00:39:07 ◼   ► dan um just as a little little shorthand

00:39:11 ◼   ► here there are people out there who talk

00:39:13 ◼   ► about services revenue and they say like

00:39:15 ◼   ► apple's becoming a services company and i

00:39:17 ◼   ► have a i have a chart that i started a

00:39:18 ◼   ► year ago which is one of these quarters

00:39:20 ◼   ► apple's going to make more profit from

00:39:22 ◼   ► services than hardware

00:39:23 ◼   ► yeah and i think it's interesting but

00:39:26 ◼   ► that can be you can read in too much

00:39:28 ◼   ► into that and say um oh apple's just a

00:39:31 ◼   ► services company now but that's not what

00:39:34 ◼   ► the services line is but i'm going to

00:39:36 ◼   ► state this as clearly as i can the

00:39:39 ◼   ► services line is a way for apple to make

00:39:43 ◼   ► additional revenue from its existing

00:39:45 ◼   ► customers

00:39:45 ◼   ► the services line doesn't exist without the

00:39:48 ◼   ► iphone

00:39:49 ◼   ► the services line is at least half

00:39:52 ◼   ► iphone based revenue if not much more

00:39:55 ◼   ► because half of the revenue is the iphone

00:39:57 ◼   ► apple's customers are primarily iphone and

00:40:00 ◼   ► as a result the services line is about

00:40:04 ◼   ► apple taking a hardware product that you

00:40:07 ◼   ► buy and then you use for one two three

00:40:09 ◼   ► four five years and then on top of it

00:40:12 ◼   ► selling you with a margin with a you know

00:40:14 ◼   ► whatever 30 40 margin and then on top of

00:40:16 ◼   ► that getting another hundred dollars a

00:40:20 ◼   ► year out of you at 95 margin that's what

00:40:25 ◼   ► the services is so services the right way

00:40:28 ◼   ► to think about services is services is

00:40:30 ◼   ► making more money at a higher profit margin

00:40:34 ◼   ► from hardware customers because you know

00:40:38 ◼   ► every now and then i see somebody who kind

00:40:40 ◼   ► of gets untethered and thinks apple

00:40:42 ◼   ► services business is not not tethered to

00:40:45 ◼   ► their hardware and it's not true it is

00:40:48 ◼   ► incremental high profit revenue being

00:40:51 ◼   ► generated so that instead of selling

00:40:53 ◼   ► somebody a nine hundred dollar iphone every

00:40:57 ◼   ► three years and saying they're worth three

00:40:59 ◼   ► hundred dollars a year to us suddenly

00:41:01 ◼   ► they're worth five hundred dollars a year

00:41:03 ◼   ► to you or four hundred or six hundred and

00:41:06 ◼   ► the last one or two or three hundred of

00:41:08 ◼   ► that is much more profitable than the phone

00:41:11 ◼   ► and so that's what services is is like the

00:41:14 ◼   ► services requires a healthy app store which

00:41:17 ◼   ► requires investment in the iphone yeah it

00:41:20 ◼   ► requires a healthy app store it requires

00:41:22 ◼   ► upselling apple care which they just added a

00:41:25 ◼   ► new apple care product that is more like

00:41:27 ◼   ► this it is it is it is selling icloud

00:41:30 ◼   ► storage it is selling services like fitness

00:41:33 ◼   ► and news and and tv plus music it it is and

00:41:36 ◼   ► music it's all of those things and it's the

00:41:39 ◼   ► google search revenue sure it's that too but

00:41:41 ◼   ► it's a lot of other stuff too i just you know

00:41:43 ◼   ► just keep in mind like it's built on the back

00:41:45 ◼   ► of primarily the iphone and so you know in a

00:41:49 ◼   ► i'm sure some analyst has done this but like

00:41:52 ◼   ► you could make an estimate of where what the

00:41:55 ◼   ► composition of apple's install base is in

00:41:57 ◼   ► terms of do they have an iphone only do they

00:41:58 ◼   ► have iphone and like and what are they paying

00:42:00 ◼   ► in terms of services you could probably somebody

00:42:02 ◼   ► could probably do this as a research project so

00:42:04 ◼   ► i leave it out there for one of those

00:42:05 ◼   ► analysts one of those financial analysts who's

00:42:08 ◼   ► just waiting three months to be on a call again

00:42:10 ◼   ► um i'm sure somebody could estimate what

00:42:14 ◼   ► portion of that revenue could be allocated to

00:42:18 ◼   ► iphone ipad mac and i i mean i'm i'm pretty sure

00:42:22 ◼   ► they could do that and uh and the answer would

00:42:25 ◼   ► be that the iphone would seem even larger than

00:42:27 ◼   ► it is

00:42:27 ◼   ► good point i have a few quotes from tim cook

00:42:30 ◼   ► talking about ai in response to some of the

00:42:33 ◼   ► questions from the analysts on the call

00:42:34 ◼   ► first up we're significantly growing our

00:42:37 ◼   ► investment we did during the june quarter we

00:42:39 ◼   ► will again in the september quarter

00:42:41 ◼   ► i'm not putting specific numbers behind that

00:42:43 ◼   ► at this point but you can probably tell in the

00:42:45 ◼   ► guidance that things are moving up

00:42:46 ◼   ► we're also reallocating a fair number of

00:42:48 ◼   ► people to focus on ai features the features

00:42:51 ◼   ► within the company we have a great team and

00:42:53 ◼   ► we're putting all of our energy behind it

00:42:55 ◼   ► and then continues we've acquired around seven

00:42:58 ◼   ► companies this year and that's companies from

00:43:00 ◼   ► all walks of life not all ai oriented we're

00:43:03 ◼   ► very open to m&a mergers and acquisitions

00:43:06 ◼   ► that accelerates our roadmap we are not stuck

00:43:08 ◼   ► on a certain size company although the ones

00:43:11 ◼   ► that we have acquired thus far this year are

00:43:13 ◼   ► small in nature basically we ask but basically

00:43:16 ◼   ► ask ourselves whether a company can help us

00:43:19 ◼   ► accelerate a roadmap

00:43:20 ◼   ► yeah i love to accelerate a roadmap you take

00:43:23 ◼   ► a roadmap and you throw it

00:43:25 ◼   ► the metaphors i mean there was comment in

00:43:29 ◼   ► the in the member discord about tough

00:43:31 ◼   ► compare it's like you know you could your

00:43:33 ◼   ► head will explode if you try to parse

00:43:35 ◼   ► uh this kind of language you just kind of

00:43:37 ◼   ► have to translate it for humans it just it

00:43:39 ◼   ► is it is it just means whatever it means

00:43:41 ◼   ► accelerate a roadmap um and i love it

00:43:44 ◼   ► actually the person who asked that question

00:43:45 ◼   ► said accelerate your roadmap and then tim

00:43:47 ◼   ► picked it right up because they're speaking

00:43:48 ◼   ► the same language anyway yes good point i will

00:43:51 ◼   ► accelerate my roadmap so what what is what

00:43:54 ◼   ► is tim what is tim saying here well one

00:43:57 ◼   ► thing is it's talking he's trying to set a

00:43:59 ◼   ► narrative about how apple is doing ai

00:44:02 ◼   ► investment so they're like they're increasing

00:44:04 ◼   ► their investment in r&d uh in the current

00:44:07 ◼   ► quarter and then in or in the past quarter

00:44:09 ◼   ► and in the current quarter um things are

00:44:13 ◼   ► moving up in terms of the rd budget he says

00:44:15 ◼   ► we're also reallocating our people to focus

00:44:17 ◼   ► on ai features so we're doing that and then

00:44:19 ◼   ► somebody says what about m&a what about

00:44:21 ◼   ► buying companies and tim's almost a little

00:44:23 ◼   ► offended because he's like look we've

00:44:25 ◼   ► already bought seven companies this year he

00:44:27 ◼   ► actually said i think you didn't quote he's

00:44:28 ◼   ► like we buy a company every several weeks

00:44:31 ◼   ► right like we're on it we're buying companies

00:44:32 ◼   ► all the time you guys don't talk about it but

00:44:34 ◼   ► we're buying companies people are asking

00:44:37 ◼   ► about but what he says here and i think

00:44:40 ◼   ► this is i think this is true and i think this

00:44:43 ◼   ► is it is both spin and narrative building and

00:44:47 ◼   ► true which is he wants to explain how apple

00:44:50 ◼   ► buys companies and why apple buys companies and

00:44:53 ◼   ► i think this is i think this is really good this

00:44:55 ◼   ► is one of those rare little moments where you

00:44:57 ◼   ► figure this is how apple behaves from observation

00:45:00 ◼   ► and then you see them kind of phrase it in a

00:45:03 ◼   ► certain way in a call where you're like see

00:45:04 ◼   ► there there it is they're saying what we

00:45:07 ◼   ► observe and so what he said is we sorry for

00:45:12 ◼   ► using these terms again but we're open to m&a that

00:45:16 ◼   ► accelerates our roadmap we ask ourselves whether a

00:45:19 ◼   ► company can help us accelerate our roadmap so

00:45:22 ◼   ► what does this mean i'll translate it now into

00:45:24 ◼   ► human apple wants to buy a company that helps

00:45:27 ◼   ► further its plans and i think that's important

00:45:32 ◼   ► because what apple doesn't like to do is buy a

00:45:35 ◼   ► company that has its own plans and then make

00:45:38 ◼   ► those its plans apple apple and you could say

00:45:41 ◼   ► this right or wrong for ai by the way i think it

00:45:43 ◼   ► cuts both ways here but what apple is the way

00:45:46 ◼   ► apple looks at buying companies is will that

00:45:49 ◼   ► company take us where we want to go not we don't

00:45:53 ◼   ► know where to go let's buy this company and

00:45:55 ◼   ► they'll take tell us where to go that is not

00:45:57 ◼   ► what apple does so i think that's worth thinking

00:46:00 ◼   ► of the next time you hear about apple buying a

00:46:02 ◼   ► company because most of the acquisitions apple

00:46:04 ◼   ► does are very much like oh we need to do this

00:46:06 ◼   ► thing there's a company that does this thing

00:46:08 ◼   ► let's just buy them and now they are doing that

00:46:11 ◼   ► thing for us and not uh i don't know what we're

00:46:14 ◼   ► going to do next let's just buy a let's buy a

00:46:16 ◼   ► company and they'll tell us what to do that's just

00:46:18 ◼   ► not how they approach it but they do buy companies and

00:46:21 ◼   ► he is also saying here doesn't have to be a small

00:46:23 ◼   ► company i think that apple wants to make that

00:46:25 ◼   ► clear that occasionally they will spend a huge

00:46:28 ◼   ► sum sum of money on a big company but mostly they

00:46:30 ◼   ► don't and i think he's trying to reassure them

00:46:32 ◼   ► that if they want to buy an ai company an ai

00:46:36 ◼   ► company that is going to take apple where it feels

00:46:40 ◼   ► it needs to go strategically they'll do it and i think

00:46:44 ◼   ► that's what wall street wants to hear honestly but i

00:46:47 ◼   ► think he wanted to put it in the context of like how

00:46:49 ◼   ► apple approaches that thing which is you know we

00:46:52 ◼   ► will do what we need to do to further our goals and um you

00:46:57 ◼   ► know leaving all the accelerated roadmaps out of

00:46:59 ◼   ► it i think that's what they're what they're always

00:47:01 ◼   ► trying to do i do think they're on the hunt for the

00:47:04 ◼   ► ai companies though i think so i think in talking

00:47:07 ◼   ► about this in this way to me i i agree with what

00:47:10 ◼   ► you're saying but to talk about it in this way uh even

00:47:13 ◼   ► referencing like accelerating a road map what roadmap you

00:47:18 ◼   ► know and so i think that they're trying to signify that

00:47:21 ◼   ► they are on the lookout and they will buy but i would say

00:47:25 ◼   ► this never say never this is like so the baseball trade

00:47:30 ◼   ► deadline was last week too and everybody's like

00:47:31 ◼   ► everybody's already got got this amazing trade that they're

00:47:34 ◼   ► going to do where a big you know star is going to come to their

00:47:37 ◼   ► team and a blockbuster and most of the trades are boring

00:47:39 ◼   ► and i want to say that it's it's a little like this too which is

00:47:42 ◼   ► everybody's going to talk about what if apple buys company you've heard of

00:47:46 ◼   ► and maybe they will like like tim cook said you know

00:47:49 ◼   ► it it could happen but i would say the most likely scenario is that apple will buy

00:47:58 ◼   ► ai companies you haven't heard of that are startups that are doing interesting

00:48:03 ◼   ► things with interesting talent that is fitting with what apple wants to do and i

00:48:08 ◼   ► don't know enough about this space to know who those people are either but like i would

00:48:12 ◼   ► say if there are if there are companies that are building interesting models efficient models models

00:48:19 ◼   ► models that really want run well on um on phone hardware and pc hardware that don't need uh you know that are more efficient or that they had a breakthrough in terms of efficiency those are things apple's going to be interested in

00:48:34 ◼   ► um but and my you know my guess is that there are a bunch of ai startups out there

00:48:41 ◼   ► will that please wall street and will that solve some of apple's real problems with brain drain

00:48:47 ◼   ► and with strategy i don't know right like and they could if they really want to go buy

00:48:52 ◼   ► you know if they're for sale buy a big company you've heard of maybe they'll do that too but

00:48:57 ◼   ► i would say best guess is they will continue to buy companies you've never heard of but that

00:49:05 ◼   ► maybe somebody who's been focused on ai will be like oh that's i see what they're doing there that's smart

00:49:10 ◼   ► yeah um and and that's because that's their that's generally their playbook not roadmap playbook is

00:49:16 ◼   ► accelerate the playbook that you can accelerate the playbook by buying a uh smaller companies

00:49:21 ◼   ► you know and so yeah we'll see but but i mean he feels the pressure right cook feels the pressure

00:49:26 ◼   ► he has to say something like that out loud uh it's because people are asking everyone is asking are

00:49:32 ◼   ► you gonna buy ai stuff and he the two together is like look we're working on ai stuff we're spending

00:49:37 ◼   ► more money on r&d we're retasking our people and sure we buy companies all the time and if it fits

00:49:42 ◼   ► with what we're doing we will look at it because that's what we do um and he's trying to reassure

00:49:46 ◼   ► investors that that's what apple is doing with their ai strategy and you know take it for what it's

00:49:50 ◼   ► worth i mean this i'm just i'm just telling you what they're saying uh you can believe them or not

00:49:54 ◼   ► like they're not lying but they're they're spinning for the street they want to say we're on it and you

00:50:00 ◼   ► can you can decide if you think they're actually properly on it or not but i think that's what

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00:52:19 ◼   ► mark german reported on the aforementioned in this episode one hour all hands meeting that apple held

00:52:26 ◼   ► last week apparently a meeting of this type is rare um to have like a big all hands for such a long

00:52:33 ◼   ► period of time uh it included a bunch of executives i have information here about stuff that tim and

00:52:39 ◼   ► craig fitterighi said so a couple of quotes for you tim said that the ai revel this is quoting mark

00:52:45 ◼   ► german um so there's some quotes some like right some of mark german's color on this so tim said that

00:52:52 ◼   ► the ai revolution is as big or bigger as the internet smartphones cloud computing and apps apple must do

00:52:59 ◼   ► this apple will do this this is sort of ours to grab we will make the investment to do it all right now

00:53:05 ◼   ► i i want to i want to stop you there just to say he's talking to apple he's talking to everybody at