00:00:00 ◼ ► from relay this is upgrade episode 615 today's show is brought to you by century fitbud keeper and express vpn my name is mike hurley and i'm joined by jason snell hi jason hello mike hurley it's good to be here again as always as always as always until next week when you're not here that's true next week i'm
00:00:29 ◼ ► i'm not gonna i'm gonna be away and so uh you're gonna have a guest to fill in which i'm always excited about because i love listening to the show when i'm not on it i've asked stephen hackett to fill in perfect so that way we can maintain relay co-founder continuity it's very important and i couldn't ask for anybody better and he's not on any tech podcast anymore is he that's very true he doesn't do any of those i can't think of one there isn't one i have a snow talk question for you it comes from darren who says i just watched the video of jason's new
00:00:59 ◼ ► door lock on his review that you spoke about a few weeks ago and i couldn't help but notice the color of his front door always peeping always peeping those pixels aren't you i have to ask jason was it deliberate that you made your door tardis blue i'm watching doctor who for the first time and every time i see that shade of blue uh in the world now i can't help but think of the famous police box darren
00:01:24 ◼ ► it was deliberate oh my god it was it's literally literally amazing literally uh i got the pantone color
00:01:34 ◼ ► wow david tennant i think police box and gave it to our painter and said this is the color we would like our
00:01:42 ◼ ► door to be fantastic in fact and the door it may not have showed up in the uh in the in the video but the door has
00:01:51 ◼ ► four little glass windows at the top of it and has the shape the shape of the door and the placement
00:02:02 ◼ ► so yeah that was it that is that door front door is the homage to doctor who and the the reason that
00:02:09 ◼ ► we like it is because if you know you know and no one else will notice it's just a blue door it's just
00:02:15 ◼ ► very nice darren but if you know you know uh and just like the tardis the snow house is uh bigger on
00:02:21 ◼ ► the inside bigger on the inside i if only it were bigger on the inside that would be really nice because
00:02:27 ◼ ► it's very small on the inside and the outside well you've done your best you know you expanded into the
00:02:33 ◼ ► garage right so this kind of makes it a little bit bigger i guess i guess that's it's like you'd think
00:02:37 ◼ ► that was where the cars go but actually that's where the podcasts happen yeah that's true that's true it
00:02:42 ◼ ► does contain multitudes there's no doubt about that if you would like to send in a snow talk question
00:02:47 ◼ ► to open a future episode of the show it's very easy just go to upgradefeedback.com and send in
00:02:52 ◼ ► yours thank you darren for that great question we have some follow-up jason snow we have some
00:02:57 ◼ ► up gradients that have written in with some thoughts today that i want to share so faez wrote in and said
00:03:01 ◼ ► regarding the ultra naming for the upcoming iphone and maybe macbook pro perhaps instead of features
00:03:09 ◼ ► uh and like what the feature set is determining ultra it could just be simply going up the price
00:03:15 ◼ ► ladder the names essentially saying how expensive something is the only thing consistent about the
00:03:20 ◼ ► iphone air ipad air macbook air is that they're placed between the regular models and the pro models
00:03:26 ◼ ► perhaps this is the same vein but for the top end i heard we got i feel like a lot of feedback about
00:03:32 ◼ ► about our ultra mac conversation my problem with the mac conversation um and there's more to come here
00:03:42 ◼ ► but like my problem with the mac conversation is i feel like if you're going to add another level you're
00:03:47 ◼ ► kind of if you're probably committing to doing it for a long time and i'm just not sure there's four
00:03:51 ◼ ► levels of differentiation in mac laptops that need to exist yeah that are consistently you can keep them
00:03:56 ◼ ► in fact one of the criticisms people have about the the ipad sometimes is like what is the what is the
00:04:02 ◼ ► air and and leaving the mini out of it because it's a it's a different kind of product like that's
00:04:07 ◼ ► there's only three so you know what how are the how are the four laptops differentiated and i just i
00:04:12 ◼ ► struggle with the idea of what the macbook pro is if there's a macbook ultra um there's some
00:04:18 ◼ ► challenges there i'm not against ultra as a as a name to differentiate a product line um and i i and i don't think
00:04:26 ◼ ► it needs to necessarily mean anything other than what apple wants it to mean right and it can and
00:04:30 ◼ ► that can vary per product i just i just it's the macbook pro itself like that's a very popular
00:04:37 ◼ ► successful way to differentiate a product i'm not sure there's another one above it i'm not sure what
00:04:41 ◼ ► that does to the macbook pro if you put it there and i'm not sure how long do you have the ability
00:04:46 ◼ ► to keep it going uh matthew wrote in and said i want to guess that with the expected split in the
00:04:52 ◼ ► iphone announcements that they could actually do this to the iphone too the iphone neo iphone air
00:04:58 ◼ ► iphone pro and iphone ultra then bring it all into alignment with the mac and other products with each
00:05:04 ◼ ► moniker being sold as standing for something specific the neo fun and value focused consumer
00:05:10 ◼ ► air is fashion style and portability pro camera and video creator focus and ultra bleeding edge
00:05:17 ◼ ► technology for new adopters sure i guess what i would say is i understand our human i was gonna say
00:05:26 ◼ ► our listeners but really it's just our human desire to patents directly quote to directly quote matthew
00:05:34 ◼ ► bring it all into alignment yeah but i will tell you we want apple to do everything in a way where we can
00:05:43 ◼ ► make a spreadsheet out of it and put it in perfect understanding and alignment and i'm apple apple doesn't
00:05:51 ◼ ► because apple wants to make money and maximize the success of every product and putting everything in a
00:05:58 ◼ ► nice tidy box is nice and it's human nature i would say or at least for some humans it is human nature
00:06:04 ◼ ► to want everything in a nice tidy box with a nice tidy label and be consistent but in the end if you're in
00:06:10 ◼ ► a meeting at apple and you say well i know we could do something that we think is beneficial to the mac or to
00:06:15 ◼ ► the iphone but it will mean that we are stepping outside of this nice tidy label that we've given for
00:06:21 ◼ ► this thing the answer is going to be wait we're going to make more money we'll then do it
00:06:25 ◼ ► right and the tidiness is going to drop away so while i understand and i think that as as like
00:06:30 ◼ ► more broad guidelines i think we are all intuiting now what neo means and how you might apply that
00:06:36 ◼ ► elsewhere we've intuited what air means to a certain extent it doesn't really mean the same thing
00:06:42 ◼ ► everywhere like we pro obviously is a word apple uses it has a definition of it it is much looser than i
00:06:48 ◼ ► think the the literal definition right which is like an iphone pro is not is not necessarily a
00:06:56 ◼ ► professional's iphone right it means something else so i know we want these words to have meaning but
00:07:03 ◼ ► they are also marketing terms and that while they do have meaning the meeting is loose and it can shift
00:07:08 ◼ ► and it is not necessarily like what the dictionary would tell you that word means because apple defines
00:07:18 ◼ ► it because every product line is different right like the mac is not the iphone and they're going to
00:07:24 ◼ ► make the right decision for the mac and the right decision for the iphone and that's that's like i i
00:07:30 ◼ ► wouldn't expect that the iphone 17e is going to be replaced by the iphone 18 neo or iphone neo 18 or
00:07:37 ◼ ► the iphone 2027 i don't expect that to happen they could do it if they wanted to but i don't think
00:07:43 ◼ ► you know just to bring it all into alignment yeah i agree uh although i do like as a a way for me at
00:07:50 ◼ ► least to think about what ultra could mean uh being kind of more edge case kind of technology as opposed
00:07:58 ◼ ► to necessarily the most which is how i've been thinking about it that's at least kind of like a
00:08:03 ◼ ► a thing that i can square in my mind sure sure and this i mean this kind of takes us to to our next
00:08:10 ◼ ► uh piece of follow-up because the challenge here to me and my stumbling block with macbook ultra
00:08:23 ◼ ► i have a hard time imagining that the cutting edge remains there every year and also the macbook pro
00:08:36 ◼ ► is relevant beneath it that's my challenge with it um is more ongoing so let's yeah let's move on to
00:08:42 ◼ ► the next piece of feedback and then we can talk about it a little more dan says even though it might
00:08:46 ◼ ► sound ridiculous what if they took a cue from the iphone and called it the macbook pro max
00:08:51 ◼ ► there's precedent for the iphone pro max to have exclusive features that let that later trickle
00:08:56 ◼ ► down to the regular iphone pro just don't think too hard about someone owning a macbook pro max of
00:09:02 ◼ ► m5 max processor or a macbook pro max with an m5 pro processor does the m5 the macbook pro max get a
00:09:10 ◼ ► max and a macbook pro gets a pro or would it be the macbook max it's a mac and it's max i mean fine
00:09:16 ◼ ► it's the same argument as ultra i think uh i guess i guess i guess it puts it within the macbook pro
00:09:21 ◼ ► category but the iphone pro max is a product right it is a larger version of the same product in most
00:09:30 ◼ ► cases most years sometimes it has a few variations on it but it's also there every year so i like the
00:09:36 ◼ ► idea of maybe there's a way to say that this is a macbook pro you know plus a little bit more as a way to
00:09:43 ◼ ► differentiate it which brings me to an important history lesson from the aforementioned stephen hackett
00:09:49 ◼ ► who mentioned uh to us last week after listening to upgrade that when apple came out with the macbook
00:10:00 ◼ ► pro the first macbook pro with a retina display and remember it was much more expensive than the regular
00:10:07 ◼ ► macbook pro but it was the first macbook pro with a retina display i remember getting one of these a
00:10:11 ◼ ► review unit of these uh at wwdc and that was when we were having the uh our terrace party at mac world
00:10:20 ◼ ► and i remember marco arment was like do you have it can i see it and i like i remember going and getting
00:10:28 ◼ ► my review unit and bringing it out onto the terrace where everybody could well not everybody but marco and
00:10:33 ◼ ► people around marco all looked at it right that that product was marketed as the macbook pro with retina
00:10:40 ◼ ► display and it was a differentiator within the macbook pro line and for a limited amount of time
00:10:48 ◼ ► and that i'm glad steven brought it up because that fits better to me the idea because this is this is the
00:10:59 ◼ ► thing because to be clear that that had a different design too it wasn't just that it had a retina
00:11:04 ◼ ► display like it would sound like next generation this is just the one with the retina display no it was
00:11:09 ◼ ► like a brand new laptop that featured a retina display and they carried on selling the existing
00:11:15 ◼ ► macbook pros alongside it until the inevitable moment when all of them had retina displays and they didn't
00:11:21 ◼ ► need to differentiate it anymore but what they wanted to do was keep selling the macbook pro
00:11:25 ◼ ► non-retina at the price points that they sold them at while also selling this thing which was much more
00:11:31 ◼ ► expensive as a cutting-edge product and the beauty of that was that it happened and then it ended
00:11:37 ◼ ► and was absorbed back into the normal part of the line and this is the stumbling block i have with this
00:11:43 ◼ ► idea that people have had it's like oh yeah it's going to be macbook ultra is okay i get it it's going to
00:11:50 ◼ ► have oled it's going to have a touch screen it's going to be a a new uh generation of design that
00:11:58 ◼ ► will then hold on to for a few years my problem with it is is the macbook pro never going to have
00:12:04 ◼ ► an oled display is the macbook pro never going to have a touch screen are other macbooks never going
00:12:09 ◼ ► to have oled never going to have a touch screen it feels to me based on every other mac or apple product
00:12:14 ◼ ► line that probably eventually some or all of those features will trickle down now i know like the i
00:12:21 ◼ ► the ipad air doesn't have an oled display okay like every but the but the iphone 17 does
00:12:27 ◼ ► so my my my challenge here is if every macbook pro is going to have oled or or you know over five years
00:12:39 ◼ ► every macbook pro is going to get oled there's going to be this kind of typical transition
00:12:44 ◼ ► where you have the high-end new cutting-edge model and then over time it just kind of trickles down
00:12:49 ◼ ► then do you need do you do you launch ultra and then have it fade away and say well the ultra is gone
00:12:58 ◼ ► it's just the pro now and they all have it and that's what i like about this suggestion that maybe this
00:13:03 ◼ ► enables apple to continue selling what we think of as the macbook pro today and and then at a much higher
00:13:17 ◼ ► touch yeah blah right and and not give it a new product line because that's my stumbling block is
00:13:25 ◼ ► i don't see how you need to do a new product line when you're turning over laptop generations
00:13:30 ◼ ► in order to add some new features that are eventually going to be in all the macbook pros
00:13:33 ◼ ► but can't really be quite yet um i just because that feels like a commitment to me now apple doesn't
00:13:39 ◼ ► apple plays by its own rules apple could stop and say like yeah we'll just do ultra for a little for
00:13:44 ◼ ► a couple years and then we'll stop like they could make that decision i just it just doesn't make a lot
00:13:48 ◼ ► of sense to me uh whereas steven's suggestion of like remember the macbook pro with retina display
00:13:54 ◼ ► why don't we do another macbook pro like it's like a variant of the macbook pro that's higher end and
00:14:01 ◼ ► that would that would do something that i wasn't expecting i was expecting that what they would do
00:14:06 ◼ ► is they would sell the m6 touch oled macbook pro and then they'd also sell a base m6 in the old design
00:14:17 ◼ ► down lower in the price list but i thought it would be sort of like the hot the the pro and max models
00:14:22 ◼ ► would be up there and then the the base one would be down there this would enable them to sell all of
00:14:27 ◼ ► them in variations for a year or two and just say take your pick we got the ones down here and that
00:14:34 ◼ ► they're cheap and we got the ones down up here that are incredibly expensive but have this amazing
00:14:38 ◼ ► display that you've never gotten on a mac before hooray so i like this idea and this and this and this
00:14:43 ◼ ► like there will be other things like this apparently is going to be a full redesign um of the macbook pro
00:14:49 ◼ ► so yeah and it allows them to introduce it sell it because i think part of the importance here is what
00:14:55 ◼ ► they don't want to do they sell a lot of macbook pros right and and uh it's an important product for
00:15:01 ◼ ► them and it's got great margin and it's their you know it's their pro laptop what you don't want
00:15:13 ◼ ► at 14 or 16 well that computer's gone and instead we've got this oled touch screen version that's
00:15:21 ◼ ► really cutting edge and cool but it's also like a thousand dollars more and we're not selling the
00:15:26 ◼ ► other one again that's the danger right that's what they are trying to avoid i think with a scenario like
00:15:30 ◼ ► this is if you can't make the prices close enough that it's okay to just have the regular spread of
00:15:37 ◼ ► three macbook pros if you can't do that then add a couple at the top for a couple of years until
00:15:45 ◼ ► finally you can do a refresh at m8 let's say where they all have it and it doesn't matter anymore
00:15:51 ◼ ► and also you know it gives them i'm sure they feel very confident but it gives them the opportunity to
00:15:57 ◼ ► not make touch screens the default across the macbook pro line because maybe they're maybe customers won't
00:16:02 ◼ ► like it maybe it's not gonna and at least maybe gives them maybe more time to make that a better
00:16:08 ◼ ► experience than maybe version one um as such yeah uh also last week we spoke about how apple stopped
00:16:17 ◼ ► selling the 256 gigabytes ssd storage uh option for the mac mini so essentially raising the starting price of
00:16:24 ◼ ► the mac mini to 799 four days later they cut the 32 and 64 gigabyte of ram configuration options from
00:16:33 ◼ ► the mac mini so now the mac mini is still 799 with 16 gigabytes of ram or you can upgrade it to 24 or 48
00:16:41 ◼ ► gigabytes um they along with this the m3 ultra max studio can no longer have 256 gigabytes of ram it is
00:16:51 ◼ ► only available in 96 it's the only option for the m3 ultra max studio uh this is interesting to me in
00:16:58 ◼ ► two ways with the mac mini especially that the m3 ultra i think everybody could see that that was
00:17:03 ◼ ► coming that they were going to get rid of the you know really high ram option for that because it's
00:17:08 ◼ ► becomes ridiculous at a certain point but the mac mini one is weird because they made a change and then
00:17:14 ◼ ► four days later made another change so what happened in those four days why didn't they do them both at the
00:17:19 ◼ ► same time the other thing that's interesting to me is that other than the starting configuration
00:17:25 ◼ ► you can only upgrade to 24 or 48 gigabytes which are like those weird non-standard amounts of ram i just
00:17:33 ◼ ► like i wonder if there's something in that that like whatever it is they're doing for even because
00:17:39 ◼ ► it you know it's 24 or 48 i wonder if there's something rather than the 36 or 64 so but anyway that
00:17:47 ◼ ► it's it just stands out to me that they're the two that are left available um but this is very strange
00:17:52 ◼ ► to me that what happened it was four days difference why not do it once obviously things are things are
00:18:00 ◼ ► happening and they're dealing with them i want to throw into the mix here a thing that that i haven't
00:18:10 ◼ ► there's been no m5 update for these systems yeah yeah so that's another part of this right is like
00:18:21 ◼ ► these systems are also at the end of their lives and and how much of this is ram limitations and all of that
00:18:31 ◼ ► and how much of this is them also being really aggressive about what what configurations they are
00:18:37 ◼ ► either still manufacturing or have manufactured and are managing because they don't want to make too
00:18:44 ◼ ► many of the m4s if they're about to switch over to an m5 version right because that because that's the
00:18:52 ◼ ► other thing that's probably going on here is they're going to switch over they're going to these are going to be
00:18:57 ◼ ► at the end of their lives and there's going to be new models that have the m5 and what's up with that
00:19:03 ◼ ► also the m3 ultramax studio is a great example like is there an m5 ultramax studio coming and you know or
00:19:09 ◼ ► maybe it maybe not who knows but they just adds adds complexity could also be a scenario where they've had to
00:19:16 ◼ ► push those revisions out a bit longer right absolutely it's it's possible that they have especially since
00:19:22 ◼ ► those are m5 which means they work on a very specific process and maybe if they're having a
00:19:27 ◼ ► system on the chip limitations on their processes switching more macs over to the m5 process from
00:19:34 ◼ ► the m4 process might be something they don't want to do yep so um yeah we we very very rarely get to watch
00:19:42 ◼ ► apple do supply chain management in real time because they want to be a black box and just have it all work
00:19:51 ◼ ► and they work very hard to make this stuff not visible to the outside to guarantee that they've
00:19:58 ◼ ► got what they need to do what they want to do and we just are right now in a in a period where they're
00:20:04 ◼ ► not able to do that it's first time since uh really since covid that we've seen anything like this in
00:20:09 ◼ ► in terms of disruption since 2020 2021 this episode is brought to you by century so you get a bug report
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00:22:04 ◼ ► their support of this show and all of relay all right so uh speaking of supply chain issues um a
00:22:14 ◼ ► few weeks ago we spoke about tim colpin's reporting on apple needing to make a decision about how they
00:22:20 ◼ ► would deal with demand for the macbook neo essentially it was outperforming to the level
00:22:26 ◼ ► that they were running out of the binned a18 pro chips that the neo needs and then last week um when we
00:22:33 ◼ ► spoke about the earnings call we got a bit of we got a bit of color from tim saying that yes the
00:22:38 ◼ ► macbook neo had indeed exceeded their expectations um and then also at different points of the call
00:22:44 ◼ ► they were talking about their biggest bottleneck is actually tsmc's advanced nodes right now more
00:22:50 ◼ ► than it is ram or anything else so that's kind of added to the yes you can see how this has become a
00:22:56 ◼ ► problem uh colpin laid out a few scenarios in his first report for how apple could deal with this
00:23:02 ◼ ► situation uh and the one that apple appears to have chosen is to pay what is needed to tsmc to produce
00:23:10 ◼ ► more new a18 pro chips to fulfill macbook neo demand so as a reminder they use bin chips it is the chips
00:23:18 ◼ ► that were being made essentially for the iphone the ones that couldn't work good enough for the iphone
00:23:22 ◼ ► they were keeping aside for other products the neo was one of them so according to uh tim colpin
00:23:27 ◼ ► apple are preparing its various suppliers who produce all different parts of the machine
00:23:32 ◼ ► to produce another 10 million units of the macbook neo i think it's to produce 10 million units i think
00:23:38 ◼ ► it's they they they were going to do five and now they're going to do 10 so i think it's an
00:23:42 ◼ ► additional thank you it's it's they're now an additional five yeah they're going to make 10
00:23:46 ◼ ► million total a 18 pro macbook neos yeah great great clarification thank you uh and because this
00:23:53 ◼ ► is an additional supply of chips it's expected that apple will need to in some instances probably most
00:23:59 ◼ ► instances disable a gpu core so it's in line with machine inspectors because then you would have all these
00:24:05 ◼ ► new machines that have six gpu cores right because what they're doing is they're going back uh culpin
00:24:09 ◼ ► calls it a hot lot which is basically like we need another bunch of this thing and and they're going
00:24:14 ◼ ► to have to pay to do that and um because presumably they were not producing a18 pros and they're going
00:24:21 ◼ ► to need more of them but the a18 pro design has more gpu cores than are in the macbook neo because
00:24:26 ◼ ► it's using bin chips that had a failed gpu core as a result some of them will have a failed gpu core
00:24:32 ◼ ► but some of them won't and uh this may be true i mean macbook neo it's possible that some of the
00:24:39 ◼ ► chips in there also don't have do have six functional gpu cores and one of them is is uh is turned off
00:24:46 ◼ ► that's also possible just depends on the inventory but yes so the idea here is that they would probably
00:24:50 ◼ ► just disable them for all so that they don't have a weird like you know you won the lottery and you got
00:24:55 ◼ ► a magic macbook neo with an extra gpu core activated and it seems weird but this stuff does happen
00:25:01 ◼ ► sometimes when they're they're trying to like level out the the product line even if uh technically some
00:25:09 ◼ ► of the parts on some of the models could do something different they want them all to be the same so but
00:25:15 ◼ ► the big deal is that they have to go back to tsmc and buy more chips and you know the cost per chip
00:25:20 ◼ ► of because you know i i'm sure the way tsmc's contracts work i believe you know for the ones
00:25:27 ◼ ► that are that are binned apple is still paying but they're paying a lower rate because of the failure
00:25:33 ◼ ► on a component there's like a failure cost i believe this was this came up in a story when they went to
00:25:39 ◼ ► the three nanometer process at the very beginning and i think there was a period where i read a story that
00:25:44 ◼ ► said it was kind of unprecedented where if the chips were failing tsmc was basically eating it
00:25:49 ◼ ► because this was such a cutting edge thing and that doesn't usually happen so presumably the a18 pro
00:25:55 ◼ ► chips weren't free but they were essentially free in the sense that apple had already paid for them as
00:26:00 ◼ ► part of the the production process for iphones this time they're buying them all for the macbook neo
00:26:06 ◼ ► and they will have a price and that price will presumably be greater than the price was uh for the
00:26:12 ◼ ► chips that they put in the macbook neo meaning it's going to eat into their margins that they
00:26:16 ◼ ► expected for the macbook neo which is this is a very peculiar situation they've gotten themselves into
00:26:23 ◼ ► uh at this point you know we spoke about it at the time um but it is it is spectacularly strange
00:26:30 ◼ ► to have i assume create you know they created a product around the idea of what we have this chip
00:26:35 ◼ ► these chips what can we do with them and now here we are they're making fresh ones like i yeah i can't
00:26:42 ◼ ► imagine that the margin of the macbook neo uh what's the cheapest you get it at is it 499 and on education
00:26:51 ◼ ► education right 599 general public yeah but at 499 apple still expecting to make money right like they're
00:26:58 ◼ ► still expecting to make probably a pretty decent margin because they've you know what they create the
00:27:03 ◼ ► product around the idea that they could sell it for that price and it is it's interesting that now
00:27:09 ◼ ► they've the product has been so successful they've gotten themselves into a situation where that margin
00:27:14 ◼ ► has to be shrinking because this machine was not built around the idea of having its own chips made
00:27:21 ◼ ► for it like that's not what it was really built around i see people talking about you know the chips
00:27:27 ◼ ► chips are essentially free which i get that point it's hard to kind of like get that across i think
00:27:32 ◼ ► in a way that actually makes any kind of accounting sense but these are chips that they could have been
00:27:37 ◼ ► used anywhere they could have kind of just been gotten rid of they could be stuffed into things that
00:27:42 ◼ ► definitely don't need them you know like there are there are iphone chips in devices that don't use
00:27:49 ◼ ► the vast majority of the capability of that chip but they've just got to put those chips somewhere and at
00:27:54 ◼ ► least with a macbook neo these machines are using the chips to the vast majority of their capability
00:28:00 ◼ ► right because they're used in fact they're more capable than what the iphone's doing with them
00:28:05 ◼ ► right um and so it's fascinating that they've gotten themselves into this and i i really wonder
00:28:11 ◼ ► what it means for the neo in its current and then going into the future because so for right now
00:28:21 ◼ ► tim coppin suggests a few situations that he could imagine apple could do you know like maybe they just
00:28:26 ◼ ► they get rid of the cheapest one and they sell the base model being the next one up because there's a
00:28:31 ◼ ► bit more margin in it but i feel that undercuts the whole proposition of the laptop exactly he says you
00:28:38 ◼ ► know maybe they could do some add more colors to further boost sales but it doesn't feel like they
00:28:43 ◼ ► need to boost sales like this is the problem i don't know a lot about tim coppin he used to work at
00:28:48 ◼ ► bloomberg he's a writer in in based in taiwan who writes about the chip industry reading his blog
00:28:53 ◼ ► posts i'm i'm struck by the fact that he seems to have very good contacts to do reporting about the
00:28:57 ◼ ► chip industry his analysis hmm some some of his analysis doesn't make sense to me i i i i find it
00:29:04 ◼ ► kind of i i just it doesn't make sense yeah these last the last two point like the the what could they do
00:29:08 ◼ ► now it's like yes these are things they could do but they don't really make a lot of sense to do no no
00:29:14 ◼ ► what how do yeah his analysis is basically like how do they distract people from the fact that it
00:29:18 ◼ ► costs more uh they could do some new colors or it's like how do we kill the popular product right like
00:29:23 ◼ ► how do we you know like by by getting rid of the lowest price point so i think i think the wise thing
00:29:28 ◼ ► to do is take take colpin for his um good sources in the chip industry and not give the same level of
00:29:36 ◼ ► focus on his kind of punditry about what they could do um because some of it doesn't like the colors
00:29:44 ◼ ► thing is like that's i don't even know what he's talking about there like uh i i don't know colors
00:29:50 ◼ ► doesn't solve anything and uh and it's kind of weird it's just a distraction but like it it doesn't deal
00:29:57 ◼ ► with the the underlying issue here i think that you know and and barring something where they still
00:30:02 ◼ ► have enough a18 pros with uh with five gpu cores that they because i keep coming back to the fact
00:30:09 ◼ ► that one thing they could do is differentiate the high-end one differently uh or additionally to the
00:30:14 ◼ ► way they already differentiate it like maybe you put those functional six gpu ones in the higher end
00:30:19 ◼ ► one and and the but like bottom line is supply they just they need they need to have supply of these
00:30:24 ◼ ► things i have a hard time seeing them raising the price because the whole premise is the price but
00:30:29 ◼ ► at the same time their margins are going to shrink and and i think ordering chips suggests that they're
00:30:36 ◼ ► willing to do that because they need they really feel like they don't want to lose the momentum of
00:30:41 ◼ ► this product and if you raise the price or eliminate the low-end model you risk you risk reducing the
00:30:48 ◼ ► momentum of the product so maybe and maybe there are some subtle ways that you can manage this that are
00:30:55 ◼ ► that we're not thinking of necessarily as you know when we're thinking what could they do they could do
00:31:00 ◼ ► a or they could do b or they could do c um and maybe the answer is well what they're really going to do is
00:31:07 ◼ ► not manufacture as many of the low-end ones so they're going to stay like less hard you know they'll be
00:31:12 ◼ ► harder to find and they'll they'll if you want to order one of those it'll be further out and that
00:31:17 ◼ ► will you know suppress demand for that one and increase demand a little bit for the 699 model
00:31:22 ◼ ► where they'll have more of those and and that will drive more sales toward the one that's got more
00:31:27 ◼ ► margins in it like there's stuff they could do i don't know if they'll actually do that but that
00:31:32 ◼ ► was one thought that occurred to me is what if you just make the 599 harder to get and that will
00:31:44 ◼ ► without killing the 599 model entirely uh but i i don't know it is a challenge but suppressing demand
00:31:52 ◼ ► even feels complicated because you've now just spent all this money on the chips so like you've kind of
00:32:00 ◼ ► they've got to get very balanced and like we should we need to basically sell all of these but not too
00:32:06 ◼ ► quickly i think this is such a low price product here's my summary take of this which is this
00:32:12 ◼ ► product costs so little that that the profit margin on it the difference yeah between profit margin
00:32:19 ◼ ► percentage a and b is incredibly small because the product doesn't cost very much it's not going to
00:32:26 ◼ ► show up in the earnings report at least really right like like if this was an iphone that they did this
00:32:30 ◼ ► now we're into a completely different situation so so my take is if you can sell the macbook neo
00:32:38 ◼ ► at 599 with these new chips and you do the math and you still have an okay profit margin
00:32:46 ◼ ► but it's not where you'd like it to be but you're still making a profit and it's still benefiting you in
00:32:54 ◼ ► terms of this being a hot product you just take it and know that it's temporary and that you're going
00:33:00 ◼ ► to come up with a plan for what you're going to do with the a19 so that you can keep the momentum going
00:33:04 ◼ ► but build more margin in down the road and you take this as part of the cost of launching a surprisingly
00:33:12 ◼ ► successful product because because yeah eating margin on 4 million additional neos is not the
00:33:19 ◼ ► same to your point it's not even the same as eating margin on a macbook air let alone a macbook pro or an
00:33:26 ◼ ► iphone like it's not because it's a it's a 599 699 product and you know and it's part of the cost of
00:33:34 ◼ ► launching a a hit product yeah that you want to keep it rolling so that's what i would i would say not
00:33:40 ◼ ► knowing the numbers not knowing the internal discussion but just my off the top of the head
00:33:45 ◼ ► gut reaction is you just let it go because it's not going to really impact your bottom line as i mean
00:33:52 ◼ ► if you're losing money on them i guess i feel differently about it but if you're still making a
00:33:56 ◼ ► margin it's just not your your your usual margin on a low price product where the margin is small
00:34:02 ◼ ► nets out to a small amount of cash regardless just let it roll and figure out and most importantly
00:34:10 ◼ ► figure out how to start regaining margins with the next generation yep like you know if you
00:34:14 ◼ ► i'm just saying let's imagine they've gone from 30 to 20 say is the profit margin right
00:34:18 ◼ ► if you'd go to the macbook neo product manager before this product launch and said would you
00:34:24 ◼ ► sacrifice 10 of your product margin for the for having to be so successful you have to double the
00:34:30 ◼ ► order because you know and we're going to spend it on marketing say right but you're going to build
00:34:35 ◼ ► an additional marketing campaign it's going to cost this amount of money you'd say yes because this
00:34:40 ◼ ► machine is an unexpected hit in like a category that nobody would have expected apple would have a
00:34:48 ◼ ► hit and you're hurting and you're stealing you're stealing mostly sales from your competitors yes as
00:34:53 ◼ ► sebastian and discord notes market share matters sometimes you trade one for the other and the
00:34:57 ◼ ► neo is the best market share growth story yes i mean apple generally doesn't trade margin for market
00:35:02 ◼ ► share that's their thing but the neo is a different product with a different purpose and and again you
00:35:07 ◼ ► you know you're not talking at 599 if you went from 30 to 20 you know you are giving up 60 right you're
00:35:17 ◼ ► giving up 60 dollars but again i'm i i feel like it depends on how dogmatic they are inside but like
00:35:26 ◼ ► this is like version one of a product and it's a hit and it looks like it's really putting the hurt on
00:35:31 ◼ ► your competitors and you're in unique circumstances in terms of chip availability if you were ever going to
00:35:36 ◼ ► say we're just going to eat it a little bit here because all the other reasons to do this are good
00:35:43 ◼ ► yep and and you're not committing to eating margin forever you're committed to eating margin for a portion
00:35:49 ◼ ► of what you're shipping in order to keep it rolling and presumably you've got a plan for a 19 pro where
00:35:55 ◼ ► you're not going to have to eat this level of margin then just let it go and and and and keep it rolling
00:36:02 ◼ ► um because you yeah if you've got momentum for this product and you're putting the hurt on all
00:36:08 ◼ ► those windows pcs especially that are out there in the 500 price range um raising your price yep it's
00:36:16 ◼ ► the last thing you want to do you got them you got them again you know you got them in a corner you got
00:36:20 ◼ ► them against a wall you you need to you need to press your advantage even if it is hurts a little yeah
00:36:27 ◼ ► apple chose to be aggressive with this product right yeah the whole purpose of the product is to be
00:36:32 ◼ ► aggressive and they also relaunched all their social media platform stuff they really they've gone so hard
00:36:36 ◼ ► with this this is what happens sometimes when you go very aggressive you're successful it works there
00:36:42 ◼ ► you go they did it don't screw it up yeah yeah and again i can't emphasize this enough i'm sure
00:36:47 ◼ ► there's somebody who's sweating this inside apple right now make sure this doesn't happen next time
00:36:53 ◼ ► yeah what do we do to ensure what is our plan for the second generation neo that allows us to
00:37:00 ◼ ► get our margins back up where we want them to go well i mean probably they prioritize it for the bin
00:37:07 ◼ ► chips over over other things right like there's another story we're going to talk about about
00:37:13 ◼ ► chips yeah and i have a theory about that because one and we'll get to it later but like one of the
00:37:19 ◼ ► things that they're doing now that this exposes a little bit is what you said the bin chip strategy
00:37:27 ◼ ► works until you run out of chips yeah it's nice to have a bin chip strategy it's nice to be able to
00:37:34 ◼ ► use those chips that weren't in your high-end product and a lower-end product and differentiate
00:37:38 ◼ ► that way great but maybe at some point you need a broader strategy where you actually have a lower-end
00:37:46 ◼ ► chip strategy that isn't based on binning and it and what does that look like but but certainly
00:38:01 ◼ ► like everybody just needs and they're supply constrained but that's something to follow which
00:38:06 ◼ ► is are you going to get what you need out of the a19 pro if that's what is going to drive the macbook neo
00:38:12 ◼ ► now that they look at their sales numbers they will have i guess what i would would really say there is
00:38:17 ◼ ► they now have a better idea of how many binned a19 pro chips they're going to need when the a19 pro
00:38:24 ◼ ► process is complete and that will allow them once they get in supply demand balance once they announce
00:38:30 ◼ ► the next generation iphone that maybe doesn't use the a19 pro they will know how many more maybe they
00:38:36 ◼ ► need to keep making in order to fulfill demand for the next neo so that this doesn't happen again
00:38:42 ◼ ► yeah it feels like if the neo continues to be successful it definitely increases the amount of
00:38:48 ◼ ► complexity even in iphone chip like management you know like it's i know it's it's not you know the
00:38:56 ◼ ► the macbook neo does not sell you know anywhere near what any of the iphone sells but it doesn't need
00:39:04 ◼ ► to it actually shouldn't that's why you know you you kind of want your your bin chips to be a small
00:39:08 ◼ ► percentage but it does mean that if the macbook neo is important there has to be an amount of iphone chips made
00:39:15 ◼ ► for there to be the percentage that they need it's it's a weird coattail writing yeah well i mean it
00:39:21 ◼ ► may be that this product is enough of a hit that they've realized that given whatever the failure
00:39:28 ◼ ► percentage is on the iphone pro chip that that's not going to be enough yeah and and that they're
00:39:51 ◼ ► are selling more than they expected that means that the number of bin chips that they will have
00:39:57 ◼ ► will probably be also greater but it is a funny thing where they may need to say we need even more than
00:40:04 ◼ ► are in the bin yeah so keep making them for a little while after we don't need them for the iphone so that
00:40:10 ◼ ► we've got them from the macbook neo it's a very funny as as uh uh uh adi and the uh discord says uh
00:40:18 ◼ ► john and johnny must have worked this problem out already like this is i like the idea of like
00:40:23 ◼ ► turnus and sroogey having a little huddle up and it's like i guess we need more of those huh yeah
00:40:29 ◼ ► okay i'll call tsmc we'll get them what a strange couple of months it must have been for the macbook
00:40:35 ◼ ► the macbook neo product manager yeah you know at first they're like walking around look at me
00:40:40 ◼ ► everyone look at my hit and then it's like um sorry everyone i'm a problem i'm a problem now
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00:43:02 ◼ ► room around up time yeah mark kerman mark german ian king and ryan gold at bloomberg are reporting
00:43:11 ◼ ► that apple is looking to work with intel or samsung or and samsung to help them produce apple silicon
00:43:18 ◼ ► chips in the usa i'm going to read from this report the iphone and ipad maker has had early stage talks
00:43:25 ◼ ► of intel about enlisting the company's chip making services meanwhile apple executive have made visits to
00:43:31 ◼ ► a samsung plant under development in texas that will also make advanced chips bloomberg is reporting
00:43:38 ◼ ► that all of these discussions remain preliminary at this stage along with their existing reasons for
00:43:44 ◼ ► wanting to diversify supply that we've spoken about in the past you know like reliance on china and all
00:43:48 ◼ ► this kind of stuff uh ultimately and so not well reliance on china yes but also risk of china
00:43:56 ◼ ► tsmc factories are all in taiwan yeah ultimately apple is also now facing competition at tsmc unlike they
00:44:05 ◼ ► have in the past because ai companies have the cash to compete for production and they also bring the
00:44:21 ◼ ► willing to jeopardize their relationship with apple is kind of how i look at it from the outside i feel
00:44:25 ◼ ► like maybe tsmc have always given apple kind of like it will let you do what you want because you're
00:44:31 ◼ ► going to buy so many chips every year yeah i mean i i don't know if i would say willing to jeopardize
00:44:36 ◼ ► the way that i've seen it characterized is apple was tsmc's best customer and so it was always the priority
00:44:49 ◼ ► apple has to compete for tsmc's attention the reason i said the jeopardizer and you're definitely
00:44:56 ◼ ► right to pull me off is odd language is that tsmc know that apple is going to come to them with an
00:45:03 ◼ ► order of x amount of money every single year from now to infinity right like that feels it feels like
00:45:09 ◼ ► you can probably bank on that that like something massive is going to have to have happen for apple to
00:45:14 ◼ ► not keep coming back to tsmc with that order it is unknown if the ai companies are going to keep
00:45:22 ◼ ► needing to do this like that's true that we have a lot less history to suggest that that's going to
00:45:28 ◼ ► happen going forward right and that that if you're at tsmc that's one of the things you have to balance
00:45:32 ◼ ► is you have an enormous business opportunity right now with these ai companies but apple like there's
00:45:38 ◼ ► a chance that these ai companies are going to give you a lot of money for about four years and then
00:45:42 ◼ ► they're going to disappear yeah they may not but they may apple is not really going anywhere no and
00:45:47 ◼ ► so you want to so i would say it only jeopardizes the relationship in the sense that if you're their
00:45:55 ◼ ► number one customer and always their priority and suddenly you're one of their number one customers
00:46:02 ◼ ► and sometimes not their priority that is a less strong relationship yes by definition and the
00:46:09 ◼ ► management of that relationship from tsmc side is important and it feels like this story suggests that
00:46:16 ◼ ► the relationship is in some level of jeopardy maybe maybe although again like one of the things about
00:46:24 ◼ ► samsung because remember what they're really talking about is production in the us from samsung and intel
00:46:29 ◼ ► apple you could the other way to spin this would be to say i'm not actually trying to spin this this way
00:46:36 ◼ ► but you could spin it as being apple has a strategy not to get away from tsmc but to produce chips in america
00:46:44 ◼ ► and they've been on that strategy for a few years now with their initial chip partner as a part of that
00:46:51 ◼ ► go to the usa strategy which was tsmc yeah yeah and now they're also talking to intel and samsung about
00:46:57 ◼ ► joining the us chip production bandwagon but like apple and tsmc are the ones that are like they're
00:47:05 ◼ ► working on that already so you could you could view it that way i think um i think i think it's also
00:47:13 ◼ ► fair right like tsmc's got other partners apple has other partners fair is fair right tsmc if if there
00:47:21 ◼ ► is a future to bet on tsmc have to take it right that like you may end up in a scenario where you
00:47:27 ◼ ► have three companies that order chips three times the amount that apple have been ordering they don't
00:47:32 ◼ ► know but they've got a kind of anyway absolutely so so i think i think the way there are lots of ways
00:47:37 ◼ ► we could we could characterize this um but i think the maybe the right way to look at it is
00:47:43 ◼ ► is that apple and tsmc still are kind of best friends but they have other friends they do have other
00:47:50 ◼ ► friends yeah and and and and so but that's a different relationship right it's a different
00:47:56 ◼ ► relationship so i i think uh i i think there's a way to read this that doesn't look at the history
00:48:02 ◼ ► and goes whoa apple is on the outs with tsmc and they're running away to intel and samsung that's
00:48:07 ◼ ► not really what's happening here this is more about diversifying options yeah although if you
00:48:14 ◼ ► are tsmc like what you just said was apple's gonna be with tsmc to the end of time but like if apple
00:48:22 ◼ ► injects many billions of dollars in intel and intel intel's you know intel's really kind of sorry right
00:48:32 ◼ ► now or samsung i guess more intel but but you but but and it might take a decade but like if apple
00:48:40 ◼ ► injects an enormous amount of capital in intel to help intel get back on its feet and compete more
00:48:46 ◼ ► with tsmc to the point where in five or ten years intel could maybe make a play for leading edge nodes
00:48:53 ◼ ► for apple chips that's bad for tsmc in the long run you've allowed you've allowed the arch enemy that you
00:49:00 ◼ ► defeated back in the game by doing that so there are reasons you want to hold apple close if you're tsmc
00:49:08 ◼ ► because you don't the last thing you want is to be complacent about that relationship and allow them
00:49:13 ◼ ► to fund a competitor to the point where you're that competitor because then when that happens
00:49:17 ◼ ► they won't just take apple's business they'll take other business too so you don't want to do that even
00:49:21 ◼ ► though that's that you know tsmc is what i think way ahead but still that is the that is their their risk
00:49:31 ◼ ► apple's biggest supply issue right now is actually tsmc chips before ram because apple have a lot of
00:49:41 ◼ ► what do they what kind what do they call it lead-in supply or some some strange phrase like that like
00:49:46 ◼ ► yeah i don't know that it's there was a phrase that they use like we have yeah we had don't worry we
00:49:50 ◼ ► had ram but they can't get the tsmc chips that were the chips made by tsmc so they're looking more
00:49:56 ◼ ► aggressively about having additional avenues for supply but the issue remains that if they were to
00:50:03 ◼ ► decide on a second partner tsmc is far ahead in capability and quality to whoever they go with
00:50:10 ◼ ► and so there is going to be an element of needing to work with tsmc for into the long term of course i i
00:50:16 ◼ ► think the only scenario that is really happening here is apple is talking and this is true of tsmc
00:50:20 ◼ ► again the same conversation can be had about tsmc's factories in the u.s they're not going to be at the
00:50:26 ◼ ► cutting edge they're not going to be the leading edge nodes these are going to be legacy nodes they're
00:50:32 ◼ ► going to be on the older processes which means these are not going to be the premium chips that are in
00:50:38 ◼ ► apple's highest end products because these nodes are not going to be those tsmc researches and
00:50:44 ◼ ► develops and builds those nodes in taiwan that's because that's their home and that's where they do it
00:50:49 ◼ ► which are the ones they're having the shortages on right so like this is not going to solve this problem
00:50:54 ◼ ► immediately in the near term exactly in the in the not in the short term um and intel and samsung would be
00:51:01 ◼ ► similar they're not going to be necessarily up there with tsmc but they are capable of making chips
00:51:11 ◼ ► what are the chips that they're gonna make in the us and what we've heard is they're gonna be
00:51:18 ◼ ► things that are are not on the cutting edge and that this is what i was saying earlier about the
00:51:27 ◼ ► previous story which is right now apple strategy really seems to be we're gonna we're gonna put a
00:51:34 ◼ ► whole chip generation on the cutting edge nodes at tsmc and then we're gonna bin them and we're gonna
00:51:39 ◼ ► have variants and we're gonna package them together and that's how we're gonna do it like so so their
00:51:45 ◼ ► strategy is new new year new chip generation it's all on tsmc that's what we're doing this opens the
00:51:53 ◼ ► door and and i would say suggests strongly that this is not going to remain apple strategy and that what
00:52:00 ◼ ► apple strategy going forward is going to be is a split strategy where because i don't my understanding
00:52:08 ◼ ► again not a chip engineer not even close i like chips with like guacamole um but that's it that's as far
00:52:16 ◼ ► as it goes so see what i did there anyway um this is my understanding is that these these these
00:52:24 ◼ ► providers you can't just take your like blueprint from tsmc and walk over to intel and say make this
00:52:30 ◼ ► like you have to use their you have to build a chip design for their process so it it seems to me like
00:52:36 ◼ ► what apple's really saying is they're going to bifurcate their chip design and they're going to build
00:52:40 ◼ ► alternate older node chip designs elsewhere and some of that may be chip designs where it's like
00:52:48 ◼ ► part of the package and then and it's for lesser components and it's not the the core system on a
00:52:53 ◼ ► chip but it could also be that there's going to be b tier systems on chips yeah and if you look at the
00:53:00 ◼ ► the iphone there's the there's the you know a18 pro and a18 and and we've got the m5 and the m5 pro
00:53:08 ◼ ► and the m5 max and maybe an m5 ultra like you could there could be a scenario to take it back to the
00:53:14 ◼ ► macbook neo where the macbook neo's processor is no longer a binned processor from an iphone it is instead
00:53:24 ◼ ► a previous not not like an m4 not like a an a15 not like we're just going to go back in time because
00:53:32 ◼ ► those were on the cutting edge at that point it's like a new processor built on an older processor node
00:53:39 ◼ ► in arizona by tsmc or in texas by samsung or whatever and that and that could be a bunch of apple's
00:53:48 ◼ ► products right are using the b-tier chip design instead of the a-tier chip design which is reserved
00:53:54 ◼ ► for macbook pro iphone pro you know maybe other mac studio um maybe macbook air and stuff like that
00:54:03 ◼ ► too but you could you could have a bifurcated um world of apple chips that would be a new thing for
00:54:09 ◼ ► apple silicon to be bifurcated not by like you know not by as simple as these are coming off of the
00:54:16 ◼ ► same tsmc line in different designs but like this is just in a completely different we make this
00:54:21 ◼ ► this chip is is not made in taiwan by tsmc it's made somewhere completely different but we're using it
00:54:27 ◼ ► i want to come back to this i just want to mention real quick a few days later rubby whelan and rolf
00:54:32 ◼ ► winkler at the wall street journal reported that apple and intel have made a preliminary agreement
00:54:38 ◼ ► right um i don't know why they wouldn't they haven't announced this i don't know why they would not
00:54:42 ◼ ► announce this preliminary is probably the reason that they've agreed to work together but they don't
00:54:47 ◼ ► know what the terms are and they're still figuring it out also another reason you wouldn't announce
00:54:51 ◼ ► this is uh you may have missed this mike but like the u.s government apparently owns some of intel now
00:54:56 ◼ ► as a part of all of the nonsense uh that's going on and involving all of this so one reason you might
00:55:03 ◼ ► not announce this is in order to allow people in positions of power to announce it okay as part of
00:55:10 ◼ ► a big foo for all okay then i will say and this is a little inside baseball but i'm gonna i'm gonna i'm
00:55:16 ◼ ► gonna it makes sense in a way you in in this scenario in which you have painted for me yes i can i can
00:55:23 ◼ ► understand you know actually i want to i want to jump back from this a second because because i feel
00:55:28 ◼ ► like i'm being you know like i mean it is not it is not uh abnormal for a government to own a portion
00:55:39 ◼ ► of a struggling company like it happens here in the uk it's actually about to happen here before and it
00:55:45 ◼ ► happens in america like i i know that they're like i'm i'm i am sure that there is something that i would
00:55:51 ◼ ► find to be distasteful about the way in which it happens but like it is a thing which happens and i
00:55:56 ◼ ► actually in in the case of intel i absolutely agree that the american government should have a stake in
00:56:02 ◼ ► intel if it means intel stays because america needs intel for many real risks and absolutely so
00:56:11 ◼ ► absolutely also by the way this b-tier this b-tier chip strategy right which i think apple is executing on
00:56:20 ◼ ► like the the um the b-tier chip strategy whether they call it i mean i don't know what they would
00:56:27 ◼ ► call it they may just call it like m m7 is actually made by intel or made by tsmc in arizona and m7 pro
00:56:35 ◼ ► is on a different process like they can market them as being part of the same thing i don't think they
00:56:39 ◼ ► necessarily market them as as standing out but we would know like oh well it's like in the intel days
00:56:44 ◼ ► where people like oh well this is actually whatever lake and this is like some other lake or other fire or
00:56:49 ◼ ► whatever with all those intel names right like the insiders might know but um but nobody else needs to
00:56:56 ◼ ► know and it and it gets branded that way um what it does mean is it if something catastrophic were to
00:57:03 ◼ ► happen with taiwan apple would still be able to make products they might not be able to make the
00:57:08 ◼ ► same products that they did and there's issues with like would they be able to make them as long as you
00:57:13 ◼ ► know if there's if something happens to taiwan it's probably because of china and they they manufacture stuff in
00:57:17 ◼ ► china and that's where a lot of their supply chain is but it would eliminate one geographic lock and that
00:57:22 ◼ ► is um that that would be a good thing for apple so this wall street journal report i just want to
00:57:28 ◼ ► mention this and again it's a little insidery but i want to mention that mark german made that initial
00:57:33 ◼ ► report and said they're they're talking and then the wall street journal said they have a preliminary
00:57:38 ◼ ► agreement and mark german responded on social media and said basically like look i already reported this
00:57:46 ◼ ► and there is no there he basically said there is no agreement they're just talking and it it it struck me
00:57:59 ◼ ► the financial times disclosure about tim cook's thing mark german's response was to bat it down
00:58:06 ◼ ► and say that's basically that's not what i heard and it turned out the ft was undoubtedly a direct leak
00:58:13 ◼ ► from the board and was completely correct and that german was acting on his sources which had been prior or
00:58:20 ◼ ► didn't know as much or both i look at this where the wall street journal specifically reports factually
00:58:27 ◼ ► a preliminary agreement has been made and mark german says well last week i reported that there was no such
00:58:32 ◼ ► agreement so there i look at that and say well they got you mark like take take the l you you you you
00:58:42 ◼ ► you it's not even a loss you said that this was the talks were happening they have said that they'd
00:58:48 ◼ ► come to an agreement and what i didn't see from mark german was saying this isn't true i've done new
00:58:53 ◼ ► reporting that says it's not true it looked to me like he was basically saying look last week i already told you
00:58:57 ◼ ► they were talking yeah just talking it's like well but time has passed and the wall street journal i i just
00:59:06 ◼ ► again i don't know maybe mark german is right maybe the wall street journal is right but a newer
00:59:12 ◼ ► report with more specific information that follows on what mark german reported that literally cites
00:59:18 ◼ ► the bloomberg source from the previous week and says bloomberg reported previously they were talking
00:59:23 ◼ ► but now the wall street journal says they have what they are at least characterizing as a preliminary
00:59:28 ◼ ► agreement which takes the story forward a little bit yeah to me that sounds like things progressed
00:59:34 ◼ ► and i don't quite understand why mark german would like resist the idea that things progressed especially
00:59:44 ◼ ► since i didn't see him say flat out i talked to my sources again and this this wall street journal
00:59:50 ◼ ► story is not true it's more like he's offended that they progressed his story before he could and
00:59:55 ◼ ► like i just life happens you got to get over that and move on they cited you they gave you credit
01:00:00 ◼ ► for reporting this initially um and again i wouldn't make as much of it other than the fact that this is
01:00:07 ◼ ► absolutely what happened in december with the ft which is like i don't know i don't know things do
01:00:15 ◼ ► progress and other other people have sources too i don't know very weird jumping back to the story
01:00:24 ◼ ► apple's chip strategy and maybe having kind of more of a split strategy right and and it did make me
01:00:31 ◼ ► wonder maybe now let's not look i know we're all we all love speeds and feeds here right so let's not all
01:00:39 ◼ ► get upset with mike but maybe apple need to to pull back on their advancements a little bit
01:00:50 ◼ ► their manufacturing out into other areas having new cutting-edge nodes every year for the iphone
01:01:11 ◼ ► manufacturer on board and anywhere close to where they need them fast enough maybe they need fewer
01:01:18 ◼ ► new processor revisions than they currently have to allow them a little bit of elasticity in trying to
01:01:26 ◼ ► get their manufacturing sorted out like as if they're always going to be having a new cutting-edge
01:01:35 ◼ ► chip every single year intel will never catch tsmc like they're just never going to give them
01:01:43 ◼ ► the ability to try and get good enough so what's happening is that is that i think apple's chip designs
01:01:51 ◼ ► are just working in lockstep with tsmc because apple wants to use the new nodes the new the new lines as tsmc
01:01:58 ◼ ► makes new processes apple is their partner and apple benefits and tsmc benefits from that
01:02:07 ◼ ► and i and so i think i think for the most part that's what apple is doing is apple is designing
01:02:14 ◼ ► new chips in conjunction with knowing what tsmc's capabilities are going to be yeah and i i don't
01:02:20 ◼ ► think apple and i think apple has to remain tsmc's partner in that that is the partnership that has been
01:02:25 ◼ ► so successful for them what's happening though is it's not as if intel or samsung are not trying to
01:02:32 ◼ ► catch up with tsmc it's just harder for them and they trail they're behind they're not standing still
01:02:38 ◼ ► they are advancing their processor technology their production technology too and an injection of cash
01:02:46 ◼ ► from apple like what apple's not doing is going to intel and saying we want to buy some of your old crappy
01:02:51 ◼ ► stuff for what what they're saying is we want we will also want to invest in your cutting edge but
01:02:58 ◼ ► your cutting edge isn't as cutting edge as tsmc and so it is helping intel push forward and get more
01:03:03 ◼ ► capital to push forward faster to maybe catch up with tmc tsmc someday but um so i think that's the model
01:03:11 ◼ ► right is just to it and it's good for apple because then you've got more options and you get you've got a
01:03:17 ◼ ► more diverse strategy and that's probably a good thing uh overall and it also still allows you to
01:03:24 ◼ ► say to tsmc you're still the best and as long as you're the best we're going to come to you right yeah
01:03:30 ◼ ► and that's a great way of putting it right which is you're the best you're number one we all know it we're
01:03:36 ◼ ► the best at designing these chips you're the best at making them and as long as you remain the best at making
01:03:48 ◼ ► you'll lose us yeah so don't lose the lead and that i mean that's business i think that's the way to do
01:03:54 ◼ ► it did apple invest money into tsmc like going back into the day did they did they put money into them
01:04:03 ◼ ► because the reason i'm saying this is they're going to put money into intel i think that's pretty clear
01:04:06 ◼ ► right that like i don't know if they're investing i think it's more like they they will it's this
01:04:12 ◼ ► thing where they like they give you billions of dollars and they're basically like they're basically
01:04:16 ◼ ► buying they're giving you money to build a fab yeah and then they get the production on the fab for some
01:04:23 ◼ ► amount of time and it's it comes back to the the chips that they get i think that i think that's more of
01:04:28 ◼ ► what it is okay because they're just figuring you know you put money into that and uh because there
01:04:39 ◼ ► if i'm remembering i think i think there's some politics there too where there's a suggestion of like
01:04:50 ◼ ► they could do that i mean they if they feel like they need to politically they will do that
01:04:56 ◼ ► yeah because i'm just wondering like if they do that or if they put any amount of money into them
01:05:01 ◼ ► even to like you know like uh what are they incentivized to end up producing that it's uh
01:05:06 ◼ ► right it's apple is paying i just found a story that says apple paid spent 24 billion dollars at tsmc last
01:05:14 ◼ ► year okay but was that just for buying chips though yeah yeah okay yeah so they're there i i i i think that's
01:05:23 ◼ ► it i think that they are not a big are not an investor they're just an enormous customer
01:05:27 ◼ ► yeah i just wasn't because you know mate i'm not i'm not keeping track of intel's current status
01:05:35 ◼ ► like as close as say a ben thompson is but i'm just very acutely aware of they need a lot of help
01:05:41 ◼ ► before they can get started on this yeah i i think the model is not that they get investment i think the
01:05:46 ◼ ► model is that they they make a deal where apple says we're going to give you essentially yeah we're going to
01:05:51 ◼ ► give you five billion dollars and you're going to build a fab with that and you're going to make us
01:05:54 ◼ ► chips yeah and then apple's and then intel's like great we've got the money to build a fab right yay
01:06:00 ◼ ► and they build it and they make it for apple chips and then when they're done making those apple chips
01:06:04 ◼ ► they've got a fab that they can use on other chips too yeah because this is me thinking about
01:06:07 ◼ ► like you know from reading apple in china like you know foxconn they're like okay we're going to buy
01:06:11 ◼ ► all this equipment and bring it in you know like it's uh well that's it that's it right they pay
01:06:15 ◼ ► foxconn and foxconn like builds the factory and they and then apple brings in the equipment and
01:06:20 ◼ ► supplies that which doesn't happen with chip the chip manufacturing with dsmc but it's a similar
01:06:24 ◼ ► kind of idea is you know you how do you fund building these fabs that are incredibly expensive well one way
01:06:31 ◼ ► is you get a customer who's going to say we will buy all the product off of this fab now go build it and
01:06:36 ◼ ► here's the money would it not make sense for apple to have some kind of joint venture of intel
01:06:41 ◼ ► i don't know i i honestly like if we're if we're like wargaming this out far enough into the future
01:06:50 ◼ ► doesn't it make sense for apple to have some actual stake in the chips and how they're made and who is
01:06:57 ◼ ► making them to the point that they own part of it so this is the question is what does apple feel like
01:07:02 ◼ ► they want to be like apple doesn't own foxconn either right like there's stuff where apple apple
01:07:07 ◼ ► doesn't want to be in the business of doing x yeah apple has resisted manufacturing chips
01:07:14 ◼ ► that that is they design their own chips now not all of them but it got to a point when they felt
01:07:20 ◼ ► like they had to design them is you know so it's like they got to that point say when did they get to
01:07:26 ◼ ► the point of we're not employing people but we own part of a company that does i don't know my my
01:07:35 ◼ ► my gut feeling is tsmc is the leader here they're not going to buy tsmc so what they really want to
01:07:40 ◼ ► do is they don't they don't their vulnerability is that tsmc is their one chip supplier for systems on
01:07:48 ◼ ► chips that's their vulnerability and the solution is not necessarily to go into business for yourself
01:07:53 ◼ ► the solution is to make sure that there's competition and bringing some of their business
01:07:57 ◼ ► to the competition is how you assure competition yeah so i think that's the i'm not sure investing
01:08:04 ◼ ► gets you anything like we can start a rumor we can say should apple buy intel but i don't think
01:08:09 ◼ ► that necessarily makes sense i think it's it's more i think apple would view it this way which is
01:08:15 ◼ ► we're investing in our partners by making deals with them where we give them large sums of money
01:08:22 ◼ ► for them to invest in their infrastructure and then design or and then build chips for us and that's how
01:08:28 ◼ ► we invest in our partners is we invested 24 billion dollars in tsmc last year and exchange they gave us
01:08:35 ◼ ► chips like that i think that's how they view it more than something strategic about ownership so i i mean but
01:08:43 ◼ ► i don't know let's start that rumor though let's let's just start the rumor anyway apple's apple's
01:08:47 ◼ ► apple's thinking about buying intel there you go yeah i just think it's irrelevant i just think it's a
01:08:51 ◼ ► red herring i think i think that who owns intel is irrelevant it's a matter of is apple going to give
01:08:56 ◼ ► them money and rely on them to make chips for them or or or samsung or tsmc how do they how do they uh
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01:11:41 ◼ ► of relay rumor roundup time jason snell again we went so long that that's no longer the roundup so if
01:11:50 ◼ ► you look in the chapter list it was who said it was a roundup at all definitely not me mark german is
01:11:56 ◼ ► reporting that in ios 27 apple is going to allow users to choose which ai provider they want for
01:12:04 ◼ ► certain requests like text and image generation so this is in addition to the previously reported
01:12:10 ◼ ► ability of having different ai providers for things like wild knowledge and siri requests which are
01:12:16 ◼ ► currently being handled by open ai and all of this is in addition to gemini being the underpinning model
01:12:24 ◼ ► for the new version of siri is this confusing enough yet uh i'm gonna read a quote here from
01:12:31 ◼ ► mark german rather than building the best ai software and services itself the company is looking to make
01:12:36 ◼ ► it easy for customers to find a wide range of options on its devices i just feel like it you
01:12:43 ◼ ► know it's gonna be like all right in this place you can choose from these people and in this place you
01:12:48 ◼ ► can choose from these people you know and i'm sure it will be done easier that like when you uh install
01:12:52 ◼ ► your favorite chat bot it pops up and it's like would you like oh you know what this is gonna be like
01:12:57 ◼ ► jason just as i started talking this out i can see where we're going every time i open a web browser on
01:13:02 ◼ ► my mac and it's like oh hey why don't you make me the default every time you open any app on ios and
01:13:08 ◼ ► mac os hey i could do this for you and i could do this for you and i could do this for you let me do it
01:13:14 ◼ ► all let me do it all um mark german is also do you have anything to say on that it's like okay right
01:13:20 ◼ ► like i i this is how it this is how it should be right and the only reason we and we know from apple's
01:13:26 ◼ ► behavior that what apple likes to do is be the only and elbow everybody else out because it's apple's
01:13:32 ◼ ► platform but the other way you play this is where apple is now because of their weakness in it which
01:13:38 ◼ ► is we want to be a nice default but we also want anybody else to play here if they want to play here
01:13:45 ◼ ► because it makes the platform better like if you would prefer to use claude or prefer to use chat gpt or
01:13:51 ◼ ► whatever you can just choose it and it will work seamlessly with apple uh hardware and like i i think
01:13:59 ◼ ► that's good i i think that more stuff should probably work like that but certainly this is reasonable and
01:14:05 ◼ ► and it makes it harder i think for for apple's competition to say oh apple they don't get ai if
01:14:13 ◼ ► apple builds a system that really embraces all the different third-party ai stuff that's out there
01:14:18 ◼ ► also the ai stuff moves so fast and and this is something that we haven't talked a lot about but
01:14:24 ◼ ► like apple's still on an annual os cycle and like yeah is apple is the model apple ships in ios 27 gonna
01:14:32 ◼ ► be updated every little while with you know a new gemini white label model or is it gonna go for a
01:14:39 ◼ ► year i think it'll be updated in the background maybe but remember this is the special apple white
01:14:47 ◼ ► label version it's not the standard gemini they're going to need a system to update it in case of an
01:14:53 ◼ ► issue right like in case it goes goes off the rails so that's going to have to be built in without a
01:14:59 ◼ ► software update i've got to assume i mean there's stuff they can do in the back end but i just wonder if
01:15:04 ◼ ► the fundamental model like that models are changing so quickly and i'm skeptical that apple's models are
01:15:09 ◼ ► going to change that quickly even if they're using gemini as the basis for them the my point is just
01:15:14 ◼ ► that the tying into third parties means that you know if you if everybody says oh my god the new open ai
01:15:20 ◼ ► model is so great you can just switch to that and then continue on and and apple doesn't have to do
01:15:26 ◼ ► anything because that is something that is happening via the ai provider but this is my theory is that
01:15:32 ◼ ► the siri app if they have the chatbot app that will actually be an app store app so they can update it
01:15:37 ◼ ► more um but then that will be functionality on top of the model but i think it would not be i don't think
01:15:44 ◼ ► they'd be setting themselves up for success if they think they only need to update this once a year i
01:15:48 ◼ ► don't think that they're really going to be setting themselves up in the way that they want it to be
01:15:52 ◼ ► i'll take that bet i think the siri app is going to be integrated with the system and any changes they
01:15:56 ◼ ► make will either be os updates or in the cloud okay you heard it here first uh a podcast that i
01:16:00 ◼ ► listen to jason i do a thing called pizza bets let's make a pizza bet so loser buys the other pizza yep
01:16:07 ◼ ► all right mark german is also reporting that apple have hit the late stages of development for
01:16:13 ◼ ► airpods with built-in cameras essentially at this stage the prototypes have gotten to the point where
01:16:19 ◼ ► the design is considered to be essentially final featuring what is expected to be the shipping
01:16:24 ◼ ► set of capabilities for these devices so i'm going to read from mark's reporting the cameras
01:16:29 ◼ ► essentially act as eyes for this for siri and aren't designed to take photos or videos these components
01:16:36 ◼ ► located in both the right and left earbuds allowed a device to capture visual information in low resolution
01:16:42 ◼ ► other than the longer stems to accommodate the cameras the product will resemble airpods pro 3
01:16:49 ◼ ► so i feel like i don't have a sense for how these this product is going to work and i'm not sure that i
01:16:58 ◼ ► want my airpods to have cameras on them anyway and to me especially if i can't use the camera right
01:17:07 ◼ ► yeah but like and i and i get why like you you would put in what is essentially a sensor right
01:17:14 ◼ ► rather than a camera right it's going to be you know some people said i are as i said low quality enough
01:17:20 ◼ ► that an ai can understand what's happening but not caring about clarity that you would want if you
01:17:25 ◼ ► would take pictures on them but then i'm wearing cameras that i can't take pictures with that is
01:17:30 ◼ ► like a big ask from me as a as a person because i wear my airpods all the time i don't know if i want
01:17:37 ◼ ► cameras pointing out at all times mark does say that the airpods have an led that lights up when visual
01:17:43 ◼ ► data is being sent to the cloud but also like the way that these products seem to work they're capturing
01:17:51 ◼ ► information often how is it processed do i not have a say in necessarily when things are going up to the
01:17:57 ◼ ► cloud or not like it's all seems quite fraught i i don't even like to like approaching this subject
01:18:07 ◼ ► from this direction because i don't care look i literally do not care about cameras being in airpods
01:18:16 ◼ ► what i care about is are there new airpods that do more interesting stuff that benefits me yeah and if so
01:18:25 ◼ ► what is that stuff yeah because like okay cameras and airpods like i believe you can put cameras in
01:18:33 ◼ ► airpods i believe in you apple why yeah why why the extra work and the extra expense and the extra
01:18:42 ◼ ► battery required and all of that what's the feature and this has always been my question what do i get out of
01:18:50 ◼ ► about of two cameras sticking out of my ears firing sideways to see things that are around me what do
01:18:58 ◼ ► i get and i know mark german's got examples which you should probably read yeah i'm not sure i i'm
01:19:05 ◼ ► sold on these examples but why don't you why don't you read them yeah so uh one of the examples so that
01:19:12 ◼ ► mark uses probably the more the most detailed is like oh looking at a set of ingredients and telling
01:19:18 ◼ ► me what to cook for a dinner and for me i feel like that is the same example that every it's almost like
01:19:23 ◼ ► the asking a chat bot to plan a travel itinerary for you everybody uses these same examples it's
01:19:29 ◼ ► nonsense it's kind of pointless i don't really think people are doing this like no you know like i just i
01:19:35 ◼ ► just don't think that i think that these are they sound nice but i don't know if anybody is actually
01:19:40 ◼ ► encountering this issue in their life that often that they need cameras on their airpods so he gives
01:19:46 ◼ ► another one and this is this is my point is yeah is we've seen this with lots of tech products recently
01:19:53 ◼ ► where they come up with these examples and they're ludicrous yeah they're like oh you could it's very much
01:20:00 ◼ ► like when personal computers came out and every single person was like you can balance your
01:20:04 ◼ ► checkbook or take uh keep recipes yeah and like that was the best they could do and let me tell you
01:20:10 ◼ ► keeping recipes on the five thousand dollar computer in your you know some far off somewhere else from your
01:20:19 ◼ ► kitchen is not a thing people did yeah or it's like you have one like this is one of these used in
01:20:24 ◼ ► visual intelligence take a picture of a poster and add it to your calendar it's like i mean
01:20:30 ◼ ► sure but like i have been able to attend to things like it's you know it's not it's not like a huge
01:20:38 ◼ ► i've had that feature for for months and months now and i've never used that once because i've never
01:20:44 ◼ ► been in a position where i've been like oh i better capture this thing that's on a poster like it's just
01:20:49 ◼ ► never happened so so mark gives more he says apple have been working on other uses for the ai cameras
01:20:55 ◼ ► good news uh the device could give the wearer a reminder based on something the camera sees
01:21:01 ◼ ► or it might use external visuals to provide more advanced turn-by-turn directions the ai could cite
01:21:07 ◼ ► a specific landmark ahead when telling users where they should turn okay so they sound a little bit better
01:21:13 ◼ ► they sound more like okay maybe what i what i hear here is the one feature that is aided by cameras
01:21:24 ◼ ► in the world right now for this stuff which is apple has a database of buildings you know based on street
01:21:32 ◼ ► view and if you're in a place where the gps connectivity is shifty which a lot of big cities in their central
01:21:39 ◼ ► cores where they've got tall buildings they have gps problems and that feature allows you to hold your
01:21:45 ◼ ► iphone up and from what your iphone sees it knows where you are it's basically able to more precisely
01:21:52 ◼ ► place you based on what it sees around you and i can see how if you were wearing airpods with these in
01:21:58 ◼ ► it would be able to use that technology probably lots of places to more precise more precisely place you
01:22:06 ◼ ► not just if you're walking not just like in a in an urban uh center although definitely then but also
01:22:13 ◼ ► in general like it would know you're on the sidewalk on one side of the street because that is a level of
01:22:20 ◼ ► precision that it can see that maybe your gps can't see like okay more advanced turn by turn specific
01:22:29 ◼ ► landmark ahead is literally like if my dot is here you know there's a landmark ahead there's no there's no
01:22:34 ◼ ► the camera is not really doing that it's just the precision that's doing it which is why i feel like
01:22:40 ◼ ► and maybe mark german you know he's got his limited ability to get stuff out of his sources he's doing
01:22:45 ◼ ► the best he can with what he's got but this to me feels like people struggling to find a reason to have this
01:22:54 ◼ ► this feature yes like this is what i worry and the landmark part i was like oh and then it could tell
01:22:59 ◼ ► you that there's a landmark coming up well it could do that now all you're really doing is saying we
01:23:05 ◼ ► have a little bit better precision than gps when we can also combine it with some visual signals it's
01:23:11 ◼ ► like okay what else you got and so like this other thing right which sounds so great but i know it's not
01:23:17 ◼ ► not going to work in the way i imagine it so the device could give the wearer a reminder based on
01:23:22 ◼ ► something the camera sees like for example imagine if i'm cooking and i have a timer for something on
01:23:28 ◼ ► the stove and i turn off the timer and i forget to turn off the stove and the thing's still boiling
01:23:33 ◼ ► or whatever i've done this before wouldn't it be incredible if your airpods could say hey that's
01:23:38 ◼ ► still boiling but you know it's not going to do that like it's not going to be that good but like
01:23:42 ◼ ► you you hear something like oh that would be kind of cool but what's it going to do it's going to be
01:23:46 ◼ ► like you didn't close the door like what what is i don't know what it could remind me about that like
01:23:54 ◼ ► actually feels you know like i just don't think it's going to do what i want it to do it's like this is
01:24:01 ◼ ► the thing like i'm hearing this whole product and what this sounds like is you're going to make
01:24:05 ◼ ► airpods worse that's what this sounds like airpods are going to be more expensive they're going to look
01:24:10 ◼ ► worse again they're going to be more uncomfortable and you're going to build a social stigma into one of
01:24:16 ◼ ► the best products you make for what for what and again i'm not saying look there are a lot of smart
01:24:25 ◼ ► people at apple this product has continued to be made and obviously they haven't announced it right
01:24:29 ◼ ► like it is this is a different conversation if we're having this after we see them show them off and
01:24:34 ◼ ► mark german's mark german's report is very specific that they have not put it into production yeah it seems
01:24:39 ◼ ► to be at the threshold of production but they have not put it into production and and so so
01:24:46 ◼ ► what i get from that is maybe there are some smart people at apple who really do believe that these
01:24:53 ◼ ► unlock a bunch of things that will actually be beneficial to users the problem i have with that
01:24:58 ◼ ► is that's how they sold visual intelligence to me and i don't think visual intelligence actually
01:25:02 ◼ ► unlocks a lot of value for anybody i mean apologies if you use visual intelligence but like it feels to me
01:25:08 ◼ ► like somebody said we've got a nice camera and we've got an ai model what could we do with it and
01:25:14 ◼ ► they came up with some things and they're not when it's when it's like if you see somebody with a dog
01:25:20 ◼ ► tell them to hold their dog still and then get kneel down in the grass and then take a picture of the
01:25:25 ◼ ► dog and then ask the computer what kind of dog it is when the person who owns the dog is sitting right there
01:25:30 ◼ ► and can tell you i can tell you that nobody uses visual intelligence because last week we eviscerated
01:25:37 ◼ ► visual intelligence and i got one piece of feedback yeah which was someone who said that they they use it
01:25:43 ◼ ► for plants but i know they can also do it with photos sorry to that person no but it's like whenever we
01:25:48 ◼ ► say this kind of stuff if if people do really use it we hear from them right and and we didn't hear from
01:25:54 ◼ ► it just feels very much like i want to believe that people at apple are building this product
01:26:00 ◼ ► and are motivated and that it survived to this late stage because they really really really do believe
01:26:05 ◼ ► that there are things that this can unlock beyond more precision for what side of the street you're on
01:26:11 ◼ ► and when you're in a big city and okay so what is that but i'm having a hard time seeing it
01:26:19 ◼ ► and and it leads to a line that jumped out at me screamed out at me from our government's report
01:26:25 ◼ ► which was i'll read this while the hardware is nearly ready concerns about the ai elements could
01:26:31 ◼ ► further hold back a launch if apple isn't pleased with the quality of the visual intelligence features
01:26:36 ◼ ► here we go which it's another air there are a lot of apple products that are like airplanes circling
01:26:43 ◼ ► the airport like waiting for permission to land all of which are waiting for ai features that apple
01:26:51 ◼ ► hasn't built and or hasn't yet enabled hasn't been capable of building and this is the part that gets
01:26:57 ◼ ► me and this is why i'm so skeptical about these airpods with cameras in them is i worry that when i say
01:27:05 ◼ ► there are a bunch of smart people at apple who have thought of reasons why this product might ship
01:27:11 ◼ ► and be relevant and have features that people would use i worry that they're not basing their
01:27:19 ◼ ► estimation of what that product is capable of and how it benefits users based on reality
01:27:24 ◼ ► i worry that there is a magical ai thinking that happens where it's like well ai is going to let
01:27:34 ◼ ► you do this and this it's going to be noticed that mike's water is still boiling when it's not on and like
01:27:39 ◼ ► and and visual intelligence is a great example of that i think that i think that there is this
01:27:44 ◼ ► problem where maybe people aren't being as realistic about what's what what the ai features are going to
01:27:50 ◼ ► be capable of then is true and i say what you will about ai and i am i am in the middle on it i believe
01:27:57 ◼ ► that some of it is amazing and some of it is snake oil but i i would say this i think that there is a
01:28:02 ◼ ► rush in the tech industry to believe hype about ai that is not practical you know um and not true and
01:28:11 ◼ ► that's what concerns me here is i'd like to believe that the people smart people at apple who are building
01:28:15 ◼ ► airpods with with cameras in them and think it's going to be good have good reasons good use cases
01:28:22 ◼ ► why me as a user why i am going to want to use this feature and it's going to be useful for me in some
01:28:27 ◼ ► way i am a little concerned that they what they believe they're going to be able to do with this is not
01:28:35 ◼ ► possible and saying it might be held up by ai is the tell which is apple is so good at building hardware that they build
01:28:45 ◼ ► hardware that relies on ai features that don't exist and then they cross their fingers and hope that they
01:28:51 ◼ ► exist someday so they can ship those products and while we've been really hard on apple for the software
01:29:02 ◼ ► if apple is designing hardware for dream features that's on the hardware designers too yeah like that's a
01:29:17 ◼ ► a cloud that says you know miracle happens here like you can't do that you cannot design this stuff
01:29:27 ◼ ► and say well the ai will fix it it'll solve it there's so much that the ai can do let's just build
01:29:32 ◼ ► visual intelligence and see what happens and that is what concerns me is that these products that are on
01:29:37 ◼ ► on hold that are in the pattern that are circling the airport right now looking to hoping to land
01:29:42 ◼ ► like are they any good is modern ai even today enough to make them useful to people or has apple's
01:29:54 ◼ ► hardware strategy partially been predicated on some assumptions about the capabilities of these features
01:30:01 ◼ ► that are just not realistic and and and no product clarifies that to me more yep exemplifies that to me
01:30:09 ◼ ► more than airpods with cameras in them because i i have yet to hear a good reason why the trade-offs
01:30:15 ◼ ► are worth it to put cameras in airpods and and mark german's trying but he can't do it can apple do it
01:30:23 ◼ ► and that last line could further hold back a launch if ai feature well why did you build this product
01:30:30 ◼ ► what's this product for i just i just don't see it this seems like a terrible idea and i'm ready to be
01:30:39 ◼ ► convinced otherwise but i thought about it and i've been waiting for people to explain how this is going
01:30:44 ◼ ► to be great and i just i'm not seeing it i'm not seeing how two cameras staring out from your ears to
01:30:58 ◼ ► and like i want to come back to the social stigma thing right yeah yeah that's one of the that's one
01:31:04 ◼ ► of the things you lose right it's battery and it's cost and it is the social question of now i've got video
01:31:11 ◼ ► monitoring i'm i'm a walking ring doorbell now like this product that mark german is saying will be the
01:31:20 ◼ ► first before glasses and i feel like that's a mistake bring glasses out and they will be able to do
01:31:27 ◼ ► everything these can do plus they'll be able to use the cameras on them or whatever and and see where
01:31:31 ◼ ► you're looking by the way and see see where you're looking yeah well yeah i mean i don't know what
01:31:37 ◼ ► direction these cameras are actually it does it doesn't make any sense to me like where anyway
01:31:40 ◼ ► but anyway like you can test how do people react to apple doing this because currently like the
01:31:49 ◼ ► reaction to ray-bans the method ray-bans was good and now it's trending not good people are not happy
01:31:54 ◼ ► about them now and so you put out apple puts out its smart glasses and sees what that reaction is because
01:32:01 ◼ ► if you start with airpods and people are unhappy now people are going to ask everyone who wear
01:32:08 ◼ ► are they the airpods with the cameras in them do you really want that to become a thing that your
01:32:13 ◼ ► users have to start contending with does it tarnish your entire product line the entire product line of
01:32:18 ◼ ► which this is a incredibly successful product line it is the kleenex of bluetooth air buds at this point
01:32:25 ◼ ► right like airpods are just like the thing that you assume that people are going to buy do you really
01:32:31 ◼ ► want to put that on people that like maybe people don't want airpods they don't want people to think
01:32:37 ◼ ► they're the ones with the cameras in them like is that what you want to risk and i feel like if you at
01:32:43 ◼ ► least start with the smart glasses that is like a whole thing you can just see what happens and and
01:32:49 ◼ ► if that product fails and people don't like it you just stop right but this is a hard thing to walk back
01:32:57 ◼ ► for airpods once you start down this road and i tell you i do not care what apple says right if
01:33:06 ◼ ► they're like you can't take pictures on these cameras no one's going to pay attention to that or
01:33:10 ◼ ► remember it these cameras are really low quality no one's going to pay attention to remember that
01:33:15 ◼ ► people are going to think airpods with cameras that's that's it it doesn't matter what your
01:33:19 ◼ ► messaging is if people don't want there to be cameras in their face like around them all the time
01:33:25 ◼ ► obviously ignore that i mean i do sometimes find it funny it's like phones have cameras and we point
01:33:31 ◼ ► them each other all the time even like whether you mean to or not but it doesn't matter like we're
01:33:37 ◼ ► we're trying to deal with this like cameras and other things and and i just i worry that they're
01:33:43 ◼ ► going to undermine the airpods by having this part of the product line have any camera in it so we'll
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01:35:02 ◼ ► verge i'm about to get ready to go on a trip so i'm going to be using express cpn everywhere i use it when
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01:35:50 ◼ ► for some ask upgrade questions to finish out today's show first comes in from josh who says do you think
01:35:58 ◼ ► that apple executives will appear at the talk show this year and do you think one of them could be john
01:36:03 ◼ ► well if if john gruber does the talk show which he probably will i'm sure he will i would think i
01:36:12 ◼ ► would think somebody i i would think yes but that's just a guess i i i think i don't know how that maybe
01:36:18 ◼ ► they thought it went great last year who apple yeah maybe they thought it went great last year and that
01:36:24 ◼ ► there's nothing there and and that they didn't they didn't really care that a bunch of us i thought they
01:36:30 ◼ ► were cowards i mean i wasn't there but i listened and there's a listener i actually i i preferred the
01:36:36 ◼ ► episode uh with joanna yeah it was really good yeah it was really good but um i think it benefits them
01:36:44 ◼ ► i think it's a net positive pr benefit for them to be there and and uh so i'm gonna say yes but
01:36:53 ◼ ► their ways are mysterious yeah i think they will do it and i think one of them will be turnus
01:36:58 ◼ ► it's a i think it's a real good possibility i think they'll do it it'll be interesting if it is him for
01:37:04 ◼ ► like what will he talk about like will he just be like i'm not ceo yet john just like you know it'll be
01:37:11 ◼ ► i i think it could be fun i mean i was talking about this on connected uh we had a segment called jobs for
01:37:16 ◼ ► john where we we've we've outlined a bunch of things that we would like john turnus to do in his first
01:37:21 ◼ ► year and one of mine was basically exactly this i i want to be on a podcast for a long period of time
01:37:30 ◼ ► and have a conversation it is a thing on a tech podcast specifically because tim cook i don't think
01:37:37 ◼ ► has ever done that um he's been on double leaper's podcast uh uh talking about kind of his life but i
01:37:45 ◼ ► want to hear the ceo of apple on a tech podcast talking about the technology and i am convinced
01:37:53 ◼ ► john turnus can do this because john turnus has been on podcasts already i've heard him on some and so i
01:37:59 ◼ ► would like to just hear him talk about the technology um so that would be lovely uh nick says do you think
01:38:07 ◼ ► that the mac mini price rise is not just because of memory prices but due to but to make room for a
01:38:14 ◼ ► mac neo desktop no yeah i i feel like at the moment there's a lot of talk about neo-ing things right
01:38:24 ◼ ► yeah yeah well it's it's natural i know it's natural but the mac mini is the mac neo desktop that's what
01:38:30 ◼ ► it is there's no need for a smaller they already made the small one it's called the mac mini and it's a
01:38:35 ◼ ► desktop mac the neo macbook neo the whole point of it is that um laptops are where everything is now
01:38:42 ◼ ► desktops are niche the mac mini is the mac neo mac you know that's what it is it has a different name
01:38:48 ◼ ► it's fine there's nothing below it um it it it's already there and that's all that uh the desktop
01:38:56 ◼ ► side of the mac line needs yeah and just in general like you you will dilute the brand of
01:39:03 ◼ ► the mac book neo by now pulling in i'm sorry boring products like the mac mini right like the mac mini is
01:39:10 ◼ ► not cool and and it doesn't matter if you paint it green it isn't cool all right it's like it isn't that's
01:39:17 ◼ ► right yeah yeah a utilitarian um aluminum cube that you can plug into a monitor but in citrus yeah
01:39:26 ◼ ► it's just no no more neos it's the mac the macbook neo is the only one all right like that's it just
01:39:33 ◼ ► leave it at that that's yeah jason writes in and says a few months ago the verge cast had an episode
01:39:40 ◼ ► about the industry shift in podcasting because netflix decided to get into podcasting but it
01:39:45 ◼ ► seemed to me that the real shift was an indeterminate point in time when youtube became the main podcast
01:39:51 ◼ ► platform i still think of podcasts as on-demand audio but more and more seem to be video first
01:39:58 ◼ ► audio if you want that the meaning of the term changed around me what made that shift are audio
01:40:04 ◼ ► first podcasts going away or simply in a lull i know you've got a lot to say here but i will say
01:40:11 ◼ ► one thing which is i love that you always say you've seen the podcast industry shift so many times and
01:40:17 ◼ ► been declared dead so many times yeah i will before you give your answer i will point out this there was
01:40:32 ◼ ► npr style serial right that was what everybody wanted i find as somebody who is firmly in the
01:40:40 ◼ ► people having a conversation genre i love that as a part of this whole thing that's what a podcast is
01:40:50 ◼ ► yeah like what we do has come back to be what a podcast is yes in a way that delights me have have
01:40:58 ◼ ► created or bought they're all talking head shows yeah like yeah i mean when i when i see like
01:41:06 ◼ ► conan o'brien needs a friend for example that's a really popular one or or amy poller's podcast that's
01:41:12 ◼ ► what we do so i love that part of it that that podcast seems to have gone gone back to the point of
01:41:19 ◼ ► being it's about people having a conversation not that there aren't other kinds of podcasts but like
01:41:25 ◼ ► there was a while there where it felt like our whole area had been redefined as something we weren't
01:41:31 ◼ ► and that definition has kind of been re-redefined to be back where uh it's what we do yeah yeah so
01:41:39 ◼ ► netflix buying the rights to some ringer shows and some others that is just the beginning of the next
01:41:48 ◼ ► death of podcasting because netflix will not renew some of those shows and then everyone will say
01:41:53 ◼ ► podcasting is dead again before netflix did this podcasting was dead because the shows you just
01:41:59 ◼ ► mentioned the the full like 25 team narrative podcast stuff all those companies started going
01:42:06 ◼ ► bust right or like amazon laid off a bunch of people at wondery who were making these kinds of
01:42:12 ◼ ► shows because they weren't cost effective for them uh because amazon bought wondery for way too much
01:42:18 ◼ ► money because of this those shows weren't all making enough money or whatever and then they let
01:42:24 ◼ ► off a bunch of people unfortunately but that is just the way this stuff goes because it has gone this way
01:42:30 ◼ ► many times in podcasting and so then everybody said podcasting was dead and then netflix bought these
01:42:36 ◼ ► shows and now everybody thinks there's a possibility for them to get their show bought by netflix
01:42:40 ◼ ► that's not going to work netflix won't renew these shows now die again so to come back to jason's
01:42:53 ◼ ► that what is happening is people think that their podcasts will boom if they go for video
01:43:03 ◼ ► so what you're seeing is a lot of people are shooing audio or audio first to go for video or video first
01:43:12 ◼ ► in the hope that it will open the door for either a massive audience on youtube or the path to netflix or
01:43:21 ◼ ► hopefully people think amazon prime or youtube paying you a ton of money for exclusive or spotify
01:43:28 ◼ ► paint on maybe now apple people might hope that's going to happen a ton of money for you to have your
01:43:32 ◼ ► video exclusive to a platform that's what people are hoping for now but this is yeah you can call i mean
01:43:38 ◼ ► we're on youtube youtube will be exclusive to youtube you know what i mean just give us some money but like
01:43:42 ◼ ► we are an example of i think the right way to do it in that the audio has not suffered at all
01:43:51 ◼ ► nobody would even know that we did video if we didn't mention at the end of the episode that you
01:43:56 ◼ ► can get the show on video yeah because we don't look at each other we haven't changed the way that
01:44:03 ◼ ► audio is being produced like you know there are some podcasts that um that i have listened to that now
01:44:11 ◼ ► they're using lav mics because it's better for their sets even though they're not recording in the same
01:44:16 ◼ ► places they're very very slowly rebuilding the talk show yeah format the late night talk show
01:44:21 ◼ ► but now but like they're not in the same places but now they've made their audio worse because of it
01:44:27 ◼ ► right or like there are so many podcasts that i listen to that now are just talking about the fact that
01:44:33 ◼ ► they can see each other all the time like there's just there's just we've got a bunch of visual jokes
01:44:40 ◼ ► that are happening that no one can even there is a podcast that i listen to that doesn't have a video
01:44:46 ◼ ► version it just has clips but they're they only make clips right for the video but they've changed
01:44:53 ◼ ► their entire setup for the clips but you can't watch the video right like and so they're referencing
01:45:00 ◼ ► things anyway so like you can't you can't do that that's the that's the the worst part is when you
01:45:05 ◼ ► start referencing things that are only available if you see the video because i'm telling you here's
01:45:10 ◼ ► my secret by the way most of those video versions people aren't actually watching them like it's a tv
01:45:16 ◼ ► show no they have them they're they're they're listening to them and occasionally they're glancing
01:45:22 ◼ ► people are you know at work and they've got one on in a window and occasionally they'll glance over
01:45:26 ◼ ► but they're not watching it because it is about the audio whether you want to admit it or not and
01:45:32 ◼ ► and i know how important clips are right like the verge just publishes big thing about clips like
01:45:37 ◼ ► it is a way that that people are like they they reference they were talking about on the verge cast
01:45:42 ◼ ► like the most recent episode there are people who consume like and i have this there are some
01:45:47 ◼ ► podcasts where i only ever see clips for them i don't listen to the podcast but i enjoy seeing the
01:45:52 ◼ ► clips but anyway this is we're getting off the point it's also it's also in a medium that is really
01:45:57 ◼ ► struggled with discovery how do you find podcasts yeah clips is actually the little video clips it's
01:46:03 ◼ ► actually one of the best things ever for podcast discovery absolutely because podcast discovery has
01:46:07 ◼ ► been so bad for so long so like you know this is happening now in the same way that the serialization
01:46:18 ◼ ► of podcasts happened where budgets exploded for podcasts and people thought that if you paid an insane
01:46:25 ◼ ► amount of money for a podcast to be made that there would eventually be insane amount of money on the
01:46:31 ◼ ► other end and that never happened it just never materialized and so podcasting died again then like
01:46:37 ◼ ► podcasting seems to i don't know why but like it is full of people who over time are willing to invest
01:46:45 ◼ ► tons of money for a bigger return that basically never comes and and i i don't know what is about this
01:46:54 ◼ ► medium that people are hoping they can turn it into tv and movies and like are willing to keep doing it
01:47:03 ◼ ► with the evidence of 20 years of it not working and and when there is and we you know you can look around and
01:47:11 ◼ ► see so many examples of people building businesses that are incredibly successful i mean we talk about
01:47:18 ◼ ► goal hanger all the time but they are the example of like they started small they built it out they're
01:47:24 ◼ ► now huge and they're they're definitely ballooning but not but not in a way that seems to be undermining
01:47:33 ◼ ► their core right like they're adding more shows that are like the shows that they're already doing it's
01:47:39 ◼ ► like the the right way of kind of scaling it and they're playing with some stuff around the edges but
01:47:46 ◼ ► they seem to be mostly kind of the way that something like this should go rather than now we're gonna
01:47:52 ◼ ► hire 70 people to work on this show or whatever you know like i think like a gimlet right where they were
01:47:57 ◼ ► having like just massive teams of people working on conversational podcasts that had a lot of research
01:48:04 ◼ ► so it needed those people but maybe that their formats weren't correct so i think what's going on
01:48:10 ◼ ► with youtube specifically is you're seeing people who want a specific kind of thing they want to be able to at
01:48:20 ◼ ► some point look at people having a conversation whether they're watching the whole thing or they're
01:48:26 ◼ ► people like me who i listen to some podcasts on youtube because i want to be able to look at the
01:48:35 ◼ ► what and but there is like a perception that i think a lot of people have that that is somehow
01:48:43 ◼ ► instead of audio where i think is actually in addition to audio in the same way that when spotify
01:48:51 ◼ ► came around people were like oh they're going to take the market away from apple but that didn't happen
01:48:57 ◼ ► they actually added to the market and one of the fascinating things about spotify i don't think this
01:49:03 ◼ ► is the case now probably but it was for a long time they brought a different kind of listener so like
01:49:11 ◼ ► typically podcasting as a whole as a medium was was demographically more male focused and it wasn't
01:49:19 ◼ ► just because the type of content it's just the way that it tended to be where the same podcasts on
01:49:24 ◼ ► spotify were getting more female listeners nobody knows why this happened but this was a thing that
01:49:31 ◼ ► happened when spotify started entering the space and so it was growth for the overall ecosystem
01:49:40 ◼ ► but people are learning the wrong lessons again and now they're chasing what i think is hilarious
01:49:47 ◼ ► which is a pivot to video and they are going to learn the same harsh lessons that news organizations
01:49:52 ◼ ► learned in their video because shows are declining in audio quality that's turning existing fans off
01:49:59 ◼ ► and it's becoming a bit of a mess all around so there you go yeah yeah it's uh i i you can see how we feel
01:50:11 ◼ ► about this by how we've approached it with upgrade which is we did change our production process slightly
01:50:19 ◼ ► in that we are now using a different um method of recording that gets us a video version that is then put
01:50:26 ◼ ► together and pushed to youtube but we are continuing our audio first production process our audio version is not
01:50:36 ◼ ► the audio track from the video version it is a custom edited properly podcast the video version is not as
01:50:46 ◼ ► detail edited for lots and lots of reasons we don't go video first because we want the audio to be primary
01:50:52 ◼ ► but we also make a video version we did adapt to do that because we do think it's kind of important to be
01:50:57 ◼ ► there i like that we're there i think we do reach people who prefer to watch it that way i watched a
01:51:04 ◼ ► podcast last night i did actually watch a podcast last night while we had dinner we watched the taskmaster
01:51:11 ◼ ► podcast which has i mean it's got comedians in it sitting in the set of taskmaster but like perfectly valid
01:51:20 ◼ ► to do it that way too i like that there's another medium for this i love that the world has discovered
01:51:26 ◼ ► that podcasts really are just talk shows yeah i love it um so it's great but but our priority
01:51:32 ◼ ► obviously is the audio which means that our first step is the audio version that most of our listeners
01:51:40 ◼ ► and viewers are using and there's a you know i i love the people who are watching on youtube but
01:51:54 ◼ ► yeah this is it's a funny podcasting is such a funny business and i don't i don't really
01:52:00 ◼ ► i kind of do know i think it was like a hobbyist business that became something people could make
01:52:06 ◼ ► real life-changing money from and so then people were like how much can we change those lives you
01:52:12 ◼ ► know and then that then it became a problem and and it continues to be a business that people can make
01:52:18 ◼ ► real life changing money from but i don't think it can change the lives of a bunch of investors i just
01:52:25 ◼ ► don't think it can make that much money it it does feel like that's where it all kind of like comes apart
01:52:30 ◼ ► is that you try to turn it into a tv show with tv show um budgets and that requires tv show show
01:52:39 ◼ ► level returns and that's not what you're going to get no if you would like to send uh your own
01:52:45 ◼ ► question in for us to answer on the show you can go to upgradefeedback.com and send in your ask upgrade
01:52:50 ◼ ► question you can also send us in your feedback and follow up there thanks to our members who support us
01:52:56 ◼ ► directly with upgrade plus you can get longer ad-free versions of the show each and every week by going to
01:53:01 ◼ ► getupgradeplus.com if you would like to see what this show looks like on the youtube platform just
01:53:09 ◼ ► search for the upgrade podcast and you can find us there i would like to thank our sponsors of this