00:00welcome to the a 16z podcast I'm Michael
00:03Copeland given the endless time we all
00:05spend with our noses and our phones it
00:08may not be too surprising to hear that
00:10the smartphone has taken over the tech
00:12world but the smartphone's dominance is
00:15so complete says a 16 ZZZ Benedict Evans
00:18that it's useful to think of it as the
00:21Sun that object around which everything
00:23else in the technology planetary system
00:26revolves and as with our own solar
00:29Benedict's mobile planetary model
00:31includes lesser bodies that circle
00:33around the Sun feeding off its energy
00:36and pull you know you might see a smart
00:39meter is Pluto you know it's like it's
00:42not very exciting it hasn't got doesn't
00:44look like it's got very much to do with
00:45mobile industry but actually it's using
00:47smart phone components putting the
00:49smartphone at the center of things also
00:51elevates the mobile supply chain above
00:53the other big component stream in tech
00:55the one serving the PC industry so
00:58instead of the guts of PCs being mixed
01:00and matched to create new kinds of tech
01:02gadgets it's all the processors radios
01:05and other bits inside smartphones that
01:07are the engine of current and future
01:10waves of technology so say someone took
01:12a shipping container of Lego and dumped
01:14it on the floor you have all these bits
01:15and we're just picking up working out
01:17what we can do with them and so that's
01:18what's behind drones and wearables and
01:21connected TVs and connected cars and
01:23Internet of Things and all of these
01:24other things and if mobile is the Sun
01:27the companies and geographies that best
01:29harness that energy are dominant now
01:32it's about Apple and Google and it's
01:35about arm and Qualcomm and Media Tech
01:38and it's about the San Francisco Bay
01:41Area and China and so all of those kinds
01:44of all of the places that you'd go and
01:47the companies that were important have
01:48changed and again that doesn't mean that
01:50Microsoft or Intel have gone away it
01:52just means that they're not setting the
01:53agenda anymore at all technology meets
01:56astronomy Plus Android stage-fright bug
01:59and y3 German car makers are getting
02:02into the software business in this
02:04segment of the a 16z podcast I sit here
02:08with Copernicus otherwise known as
02:10Benedict Evans benedict welcome hello
02:13so Copernicus you are not but you have
02:16equated the mobile phone to the Sun
02:20explain for us what the hell you mean
02:21yeah so I thought it was just an
02:24interesting unifying metaphor for
02:26thinking about what's going on in tech
02:27so the sort of the think the fundamental
02:31thing that's changed is we've exchanged
02:32a PC ecosystem for the mobile ecosystem
02:35as the dominant driver the dominant
02:37force in the industry so you go from one
02:40and a half billion pcs replaced every
02:42four or five years to four billion
02:44mobile phones maybe growing to five
02:46billion mobile phones replaced every two
02:48years and those mobile phones are
02:50converting very quickly to smartphones
02:51there's probably two billion smartphones
02:53on earth today maybe two and a half
02:54billion and the great majority of those
02:57mobile phones will convert and so we'll
02:59end up with something like one and a
03:01half billion pcs and four to five
03:03billion smart phones and those smart
03:06phones again being replaced every two
03:08years so just a much much much bigger
03:09industry and you're not saying that the
03:10PC goes away anytime soon and we're not
03:12arguing that but just that that's the
03:13number of PCs room yeah exactly I mean
03:16well there's two separate things one is
03:17just the sheer number of devices being
03:19sold reshapes the hardware ecosystem
03:21secondly the fact that smartphones are
03:24now at least half of all time spent
03:25online reshapes how the internet works
03:27what shapes how all sorts of consumer
03:29services works in the longer term it
03:32seems kind of inevitable that mobile
03:34devices start replacing more and more of
03:36how PC gets used and I've written about
03:38you know what will happen to Microsoft
03:40Office over the next 5-10 years but
03:42that's kind of kind of a separate
03:43conversation I think the core of it is
03:45that it is now the mobile phone that
03:48sort of that's this kind of a center of
03:49how the tech industry works and that
03:51gets manifested in a couple of different
03:53ways one way gets manifested is that the
03:56supply chain becomes extremely important
03:59for everyone else that is to say all of
04:01the or almost all of the components of
04:03smartphones are available off the shelf
04:05as commodity bits and pieces and in
04:08addition almost all smartphones are made
04:10by contract manufacturers who will put
04:11those components together for you to
04:13make something else and so it's as
04:15though someone took a shipping container
04:16of Lego and dumped it on the floor and
04:18you have all these bits and we're just
04:19picking up working out what we can do
04:20with them and so that's what's behind
04:22drones and wearables and connected TVs
04:24and connected cars and in
04:26of things and all of these other things
04:27they're all basically using smartphone
04:29components I had also been all been put
04:31together by smartphone manufacturers for
04:33smartphone contract manufacturers so
04:34what's common on all those kinds of
04:36companies and and it's not - Peter
04:38Levine's point here at the firm it's not
04:40just you know smartphones are going into
04:42drones and things that are small and
04:43things that are like embedded in your
04:45light switch but that as well into
04:49everything right yeah it turns out that
04:50you you just wait you just have a much
04:52much much bigger industry and so you
04:53have much higher volume you have much
04:55greater rate of innovation and you have
04:57all these new kinds of components that
04:59and you know in a data center for
05:01example it turns out that being a
05:02low-power and low temperature is
05:04actually really important in a rack just
05:06as it's really important in a small
05:07phone so you know you have all these
05:09kind of generalizable applications and
05:11then that ecosystem spreads out to all
05:13the components that are used to to
05:15create all sorts of other all sorts of
05:16things as well now the thing that the
05:19interesting thing that comes out of that
05:20is that it means at the center of
05:21gravity for the companies and the places
05:23that matter have changed as well so it
05:25used to be that you would go to
05:26Microsoft or entity DoCoMo or Nokia or
05:29Intel to find out the future and you'd
05:32go to Seattle and you'd go to Finland
05:35and you go to Japan to see the future
05:37right and that's not true anymore now
05:40it's about Apple and Google and it's
05:42about arm and Qualcomm and mediatek and
05:45it's about the San Francisco Bay Area
05:48and China and so all of those kinds of
05:52all of the places that you'd go and the
05:54companies that were important have
05:55changed and again that doesn't mean that
05:58Microsoft or Intel have gone away it
05:59just means that they're not setting the
06:00agenda anymore at all for what's gonna
06:02happen next in all these kind of
06:04experiences and and so if the more phone
06:07is the Sun and to continue the planetary
06:10analogy what are the rest of the planets
06:13out there and kind of holidays yes sorry
06:16she came to this thinking about the
06:17watch which is that you have all sorts
06:19of different planets and different
06:20orbits and they're big and small and
06:22they're boring or interesting or
06:23exciting or you know then you have kind
06:26of like messaging out as a client or
06:27comets you know that kind of spin around
06:31every now and then one of the glows in
06:33the sky yeah and so you know you might
06:38see a smart meter is Pluto you know it's
06:41like it's not very exciting it hasn't
06:43got doesn't look like it's got very much
06:45to do with the mobile industry but
06:46actually it's using smartphone
06:47components then you might have some
06:51other kind of product that's got like a
06:53thermostat or something that's got its
06:54own UI it's got its own connected
06:56services it's you know it's a standalone
06:58thing and yet you probably control it
07:00from a smartphone and it again it rests
07:02on the smartphone supply chain and then
07:04I think most interestingly you have
07:05things like cars on the one hand or TVs
07:08on the other where in a sense you have
07:11particular TVs become dumb glass that
07:15they are remote screens
07:17they're either brought to the extent
07:18there's a lot of running broadcast TV
07:19devam eight screens for smartphone and I
07:22think there was we're talking about this
07:23earlier this kind of an Oni in here that
07:25you know set Auto Satya Nadella is
07:27reconfiguring of Microsoft the stuff
07:29that got attention is writing down the
07:31mobile acquisition from Nokia and really
07:34signaling the end of Windows everywhere
07:36as the kind of driving strategic force
07:38of the company that you know you can get
07:40office on iPad that they're neutral as
07:41to what you know it's not all about
07:43Windows and office anymore and those are
07:44kind of the legacy platforms and
07:46Microsoft just trying to work out what
07:47it's going to do next
07:48yeah so interesting you know and it's
07:50not clear now but the interest and I
07:52wrote a blog post about this sort of
07:54talking about what productivities can
07:55look like in the future but the
07:57interesting thing in this context is
07:58it's not just the death of Windows every
08:00way it's also that Satya said very
08:02clearly that the Xbox isn't core anymore
08:04so that is fascinating to me because the
08:06Xbox was one of those things where if
08:08you were at Microsoft and you wanted to
08:10be like I'm the team that mattered and
08:11the team that was going places you often
08:13wanted to go to the Xbox team yeah it's
08:15a bit like Google+ the Google I don't
08:23know I said there's an irony here so I
08:25was chatting about this on Twitter the
08:27other day that sort of if you look at
08:29all the predictions of what was going to
08:30happen that people were making in 1990
08:33it all sort of presumed that there would
08:36be a small number of big companies that
08:38would build everything and the very
08:40phrase sort of the internet superhighway
08:42kind of presupposes that it's about AT&T
08:46and Comcast and Microsoft and they sort
08:49of build it all and if you look at what
08:52operators have thought about the mobile
08:53internet they started predicted a lot of
08:54stuff we're doing today but they kind of
08:56thought they would be doing it and what
08:58people didn't predict was a sort of
08:59permissionless innovation that it's
09:01thousands of companies that are building
09:03all of these different things and none
09:04of them depend on anybody else
09:05it's his permission to do anything this
09:07is what mark likes to call
09:08permissionless innovation now you then
09:10come back to the TV but a big part of
09:13the vision in 1990 was it would be on
09:15the television it wouldn't be on these
09:17personal computers that were these ugly
09:19beige boxes on him even though we're
09:21tried over and over to convince us of
09:23the you know whatever they called the
09:24entertainment center from Microsoft yeah
09:26really everyone thought it was going to
09:28be about the pit it was going to be
09:29interactive television and this is what
09:31you know this is why everyone in those
09:33kind of companies sneered at the web
09:35because no no no it has to be on the TV
09:36and I say Microsoft was putting
09:39interactivity on TV sets before when
09:41telephones didn't even have screens
09:43right right and yet here we are now and
09:46it's now painfully apparent that you
09:48know yes games consoles are a thing and
09:50yes there's a big business there but
09:52actually it's incredibly small relative
09:55to the size of the smartphone industry
09:57games console games again as better than
09:59smartphone games for now just as
10:01entertainment arcade games were better
10:03than games console games 30 years ago
10:05but it's a smartphone that drives
10:07everything else and so for the vast
10:09majority of people the TV will be dumb
10:10vast for the smartphone rather than so
10:13it won't be a box that's plugged into
10:14your TV that runs your whole digital
10:16experience right and game console will
10:18be for games yeah exactly they will be
10:21like watches or thermostats or connected
10:23cars or there'll be another planet that
10:25orbits and there will probably be games
10:27consoles indefinitely in some form
10:30whether they end up being smartphones
10:31inside really which is what they which
10:33when I export swathes of course but it
10:36will be the smartphone that everything
10:37else rotates around and the role of the
10:38TV yes you may have a games console
10:41vastly more people if they're doing
10:42anything digital on the TV will be doing
10:44something that's fundamentally derived
10:45from the smartphone that's being
10:46controlled by the smartphone you said in
10:49this post where you describe you or your
10:51planetary system that the smartphone or
10:54the mobile phone is the first universal
10:56device that technology has really
10:57produced and why wasn't the TV that for
11:00example yeah I say this and I sort of
11:03said on Twitter every now and then in a
11:05then people get extremely angry with me
11:06and they think I'm being some sort of
11:08American Silicon Valley utopian
11:10visionary which would certainly make
11:12many of my colleagues here laugh and say
11:16this is the thing there were five
11:18billion peak adults on earth out of
11:19about seven billion people and depending
11:22on what estimates you make there are
11:24between say four three and a half to
11:28four billion and maybe four and a half
11:30to five billion maybe isn't it so this a
11:33three and a half to four and a half
11:33billion people on earth have a mobile
11:35phone today three and a half to four
11:37billion out of five billion adults and
11:40so we are now long past the point that
11:44you could argue about you know is an
11:46impoverished farmer in rural Africa and
11:48to have a mobile everything you're gonna
11:49have a mobile phone is a fisherman in
11:51Indonesia gonna have a mobile phone the
11:53answer is yes he will and quite possibly
11:56someone in his village has one right now
11:58right now you look at sub-saharan Africa
12:00it's already at forty percent population
12:02penetration of mobile phones and that
12:04will go up to the same 7080 percent that
12:06you have in Western Europe and of real
12:09people like there's always like ten or
12:11ten percent of population doesn't get
12:12these things even in America and so you
12:15know these are now you know a mobile
12:18entry price of a mobile phone now is
12:19five to ten dollars to buy the phone and
12:21an Android phone is thirty to forty
12:24dollars and that's not subsidized price
12:25that's the actual price of buying the
12:27thing and then you get on to a whole set
12:30of challenges around well what are they
12:31pay for data how did they charge their
12:33phone what are they pay to charge their
12:34phone because they probably paying
12:35someone who has power to charge their
12:37phone where does solar come into that
12:39well as Google's drones and all this
12:40stuff come into that so you get a whole
12:41kind of gray area around the edges but
12:43fundamentally you get to a point that
12:45there are four or five billion people on
12:47earth you have a smartphone and PCs are
12:50about one and a half billion and half of
12:53those are corporate so it's 800 million
12:56pcs or seven or eight hundred million
12:58pcs or in someone's home and that's yes
13:02that's per household rather than per
13:03person so you know it's a slightly
13:05different metric but it's not a
13:06universal product and television in the
13:09same sense yes it has very wide reach
13:11but television in event in rule in
13:13means a television per village or two or
13:15three televisions per village it doesn't
13:16mean two or three mobile phones per
13:18household right right or per pocket for
13:20that matter yeah so you you mentioned
13:23Android and something that happened
13:25recently was this hideous Android bug
13:29yes I'm frightened just saying because I
13:31know that my phone is not patched well I
13:33love my favorite line about this is it's
13:35the first time anyone has managed to
13:36make an app that runs reliably on 95 set
13:38of Android phones yes and that's the
13:42problem right yeah it's compatible like
13:44nothing else well say this so what can
13:46one say about this there's a couple of
13:47things so first is you know bugs happen
13:49bugs happen to everyone you know apples
13:51had bugs Microsoft had bugs Google's had
13:52bugs it happens the issue here is and
13:56this is course an old issue for Android
13:58is that the only real way to get
14:01software updates for an Android phone is
14:02to buy a new phone still for a whole
14:05bunch of reasons that you know we are
14:07all pretty well understood at the moment
14:08now the kind of the thing that I tend to
14:11say when these topics come up is that
14:13Android fragmentation and sort of
14:15Android software updates and all these
14:16kind of issues are both very overstated
14:19and very understated mmm-hmm so on the
14:21one hand something like 96 97 % of all
14:25live Android phones outside China where
14:27Google isn't present but all the ones
14:29outside China that are therefore mostly
14:31connected to Google over 95% of these
14:33things have the latest player version of
14:34Google Play services which is updated I
14:36think every two weeks and so if Google
14:39push our new messaging API only payment
14:40API or some new results for their layer
14:43of Internet services everyone's got it
14:45so there's no fragmentation right on the
14:47other hand there's 4,000 devices out
14:49there and they will got different chips
14:51and different implementations of the
14:52software and so if you want to write
14:53like a video messaging app or something
14:55it's not 95 percent at the base it's on
14:59it really is 4000 different devices and
15:00you just got to pick the top 20 and test
15:02and this is kind of it's just in kind of
15:06inherent in the model that you know
15:10Microsoft or the C write down Windows
15:12Phone effective this is another piece of
15:14capitulation they basically now given up
15:16on Windows Phone although they haven't
15:17quite admitted that in public but they
15:19have right turns if the customers gave
15:21up on it long before a microg sacked ly
15:23yeah but the thing is if you want to
15:24know what Android would look like if
15:26had no fragmentation if it had
15:27completely uniform upgrades if all the
15:29hardware look the same look at window
15:30same right that's what you would get
15:32that's where it would have ended up and
15:34you know the price that you pay for
15:35having 4,000 devices is that you have
15:384,000 devices yeah there's a there's a
15:40glass half half-empty glass half-full
15:41thing here the challenge that Google
15:44faces is that you know they've gone
15:46slightly to they have found themselves
15:48slightly too far down that path because
15:50it's one thing to say well there's 4,000
15:52devices so yes of course I don't have
15:53all have the same GPU it's another thing
15:55to say there's 4,000 devices so it's
15:57impossible to update the software for
15:58all of them so you've got this
15:59vulnerability living forever well that's
16:01let's shift gears no pun intended when
16:03you hear about what this topic is but
16:05Daimler BMW and Audi teamed up to buy
16:08nokia here right yeah as you like to say
16:11Daimler said yes so yeah this is a kind
16:13of a weird story so but it is mobile it
16:16is mobile yeah so pre iPhone I think
16:19certainly a long time ago when Nokia
16:21still rule the world and thought it
16:23would rule the world forever maps were
16:25clearly very important and so they
16:26bought I think NAVTEQ I forget now take
16:31it for like seven or eight billion
16:32dollars Superman of the massive amount
16:35of money and this was his big strategic
16:36asset and then Google comes out with
16:37Google Maps and exploits the whole whole
16:39industry but they did it but the
16:41business is still there then they said
16:42and they kept it when they sold the
16:44phone business to Microsoft and there's
16:47a story in there which is you know story
16:49again it's an interesting political
16:52story about why that happened um but
16:54anyway they kept it but it was clearly
16:57completely non core because Nokia now is
16:58a network infrastructure business right
17:00and actually quite a good network
17:02infrastructure business Shawn up the
17:04handset business but it was clearly no
17:07place for that inside Nokia so it's just
17:08a question of when it was going to get
17:09bought and maps are really interesting
17:13Google there is the Google platform but
17:16anyone who isn't Google and has
17:17aspirations to independent life does not
17:19really want to allow in Google Maps
17:20indefinitely and so Apple has gone from
17:23the fiasco of a couple of years ago to
17:24are now sort of not bad mapping product
17:27and has now built a fleet of cars to go
17:29out and build its own Maps finally
17:30having previously relied on trying to
17:32stitched information together from lots
17:33of other people it looks like what
17:34they're going to try and do is basically
17:36do a carbon copy of Google Maps
17:38which is not impossibly hard project it
17:40just takes a lot of time a lot of money
17:42which is what which they have in which
17:44is what Google did and we all remember
17:45the days when Google Maps was terrible
17:47to once you know it takes time and
17:50so my cursor Apple is doing this
17:54Microsoft has basically given up on maps
17:57it shut down Bing Maps and sold the Bing
17:59Maps assets to uber and uber bid against
18:03the three big German car companies for
18:06the Nokia Maps business and so here is
18:10an interesting challenge clearly if you
18:12are in the car business you are looking
18:15with increasing concern at what Google
18:17might be doing in the future and
18:19self-driving cars are fundamentally of
18:22rooting and just dispatch and control
18:26question which means maps so maps go
18:29from being oh I've got the map on my
18:30dashboard instead of having to look at a
18:32paper map - this is a fundamental
18:33enabling technology of how cars work Ram
18:36they become fundamentally important they
18:38become like oil right for how
18:40self-driving cars work especially if
18:41they become electric cars because the
18:43sort of engineering is far simplified
18:45etc etc - yeah exactly I think we can
18:47cost about cars right you know how that
18:49changes but the kinder this is this
18:50fundamental point that maps move from
18:52being this nice feature like I didn't
18:54know like the CD player oh you've got
18:56BAM you've got maps you've got a CD
18:57player suddenly with self-driving they
18:59become this fundamentally important
19:01strategic asset and so it becomes
19:02terrifying for a car company to be
19:04depending on Google to that it's
19:06fascinating because because car
19:07companies and we did a podcast with
19:09Peter Levine and ash Ashutosh and that
19:13we were talking about how every company
19:14is a data company and this is just an
19:15even bigger exactly but the I thought
19:18this was a really interesting thing is
19:19who is bidding against Mercedes BMW on
19:22Volkswagen in fact he's bidding against
19:23them well uber right hey it's just a
19:27taxi company isn't it a transportation
19:33company and it's a platform company
19:34that's a bit like saying it's a bit like
19:36saying why don't people just does text
19:37well no no youghal is a machine learning
19:40engine Google is about understanding
19:41everything and what is evil well uber is
19:43a healin you call it transport ecology
19:46logistics call it the way that I think
19:48about maps has sort of is
19:50and that's the kind of PageRank for the
19:52real world and so if you´d is your
19:55business to send stuff around or own
19:57stuff that only moves around within that
19:58then you need to own Maps but all of
20:00this again comes back to you know my
20:01kind of original point that the
20:03smartphone is the sort of the Sun for
20:04all of this everything revolves around
20:07mobile everything revolves around that
20:08pocket supercomputer that you have now
20:10it may be that the car is doing this as
20:13well I actually have I have this
20:14incredibly clever and very sophisticated
20:16device for integrating smartness into my
20:192009 car which is this a rubber clip
20:22that slots into the air conditioner that
20:24I can instantly add to the latest pocket
20:28supercomputer to my car it's amazing
20:30it's right there yeah exactly
20:32why does it and show I always feel
20:34slightly ambivalent about the idea that
20:35you should add any kind of a smartness
20:36to a car like water I just use my phone
20:38well Tony I remember having a
20:39conversation with a very large American
20:41car company a few years back for a story
20:43and I told him exactly that I'm like you
20:46guys this is your domain and it's
20:48disappearing it's going to this thing in
20:50my pocket right now and whether they're
20:53able to reverse that whether this
20:54purchase of Nokia's mapping business is
20:56a step forward or if it's just another
20:57like large company buying a software
21:00company and not knowing what to do with
21:01it we'll see I guess well so this is I
21:03mean this is the point Ben Horowitz has
21:05made it's a lot easier for software
21:06companies software people to learn
21:08something else than people from another
21:10industry to learn software and so we
21:12know we talked about the Android phone
21:15ability what about the chrysler jeep
21:17vulnerability yeah it turns out I don't
21:20even want to mention that my car happens
21:22to be made by Chrysler for you and so
21:24not only is my phone vulnerable now Mike
21:26Harris himself but but fundamentally you
21:28know who is it best who is best placed
21:30to add software to a capital good that's
21:34made every 10 years by a non software
21:35company is it by that non-software
21:37company hiring some software developers
21:39or is it best added by Google or Apple
21:43uber somebody else it's a smartphone
21:48that drives it and you know we talk
21:50about the Xbox you can talk about the
21:51car again the TV is dumb glass and the
21:54screens in the car a dumb glass actually
21:56and they should be powered by the smart
21:58phone well we will see what gets powered
22:01by what and it seems like you so far
22:04system is and and model as holding up
22:06and when it doesn't we'll be back and
22:08talk about that to Benedict thank you
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