00:00welcome to the a 16z podcast I'm Michael
00:02Copeland and we have a full house this
00:04afternoon to talk about Apple's latest
00:06event with this is Benedict Evans Zhou
00:10Bella Moria and Frank Chen welcome guys
00:14Benedict you've just returned from
00:17Cupertino and the packed Hall they're
00:20filled with applause and excitement
00:22let's take things in order we start with
00:26the iPhone bigger larger number
00:29there was a plus what's the takeaway
00:32here yeah iPhone 6 plus does sound like
00:35kind of like a Microsoft product name
00:37doesn't happen I could i phone 6 plus
00:39professional edition 2014 edition so I
00:46thought the phones were relatively
00:47predictable especially given how much
00:49had been leaked in advance and of course
00:51equally what hadn't been leaked didn't
00:52show up right so no big surprises there
00:56it's become pretty clear that a large
01:00part of the high-end market wants a
01:01bigger phone and is willing to sacrifice
01:02the sort of ease of reaching across it
01:05with a thumb and so Apple has gone that
01:07and so we have two new models one of
01:09them which is I think 4.7 inches which
01:11is basically a big phone and one is more
01:13of a kind of a phablet size the
01:16interesting thing I think is that Apple
01:17in the last couple of years has evolved
01:19iOS 7 and iOS 8 to get away from pixel
01:22per that layouts so that it's now
01:24technically possible for them to flex
01:26the size of the screen which wouldn't
01:27have been possible two or three years
01:29ago because yeah it's just wouldn't have
01:30worked you say what they're actually
01:31doing is these devices have high pixel
01:34density and more pixels and if you run
01:36an app that doesn't know about these new
01:37things on it it basically just blows
01:39them up but the pixel density is so high
01:41that you really can't tell and so the
01:43text is just rendered as text because
01:44the operating system knows that it's
01:45text any graphical elements are just
01:47blown up but the definition of the
01:49screen is so high and the the increase
01:52in scale is sort of smaller laughter you
01:54so they're actually demoing these phones
01:56with apps that haven't been updated for
01:59for this new size the developers didn't
02:01know about it and you really can't tell
02:02obviously there's more space that they
02:04could potentially take advantage of but
02:06other than that you can't tell so
02:08there's a really smooth transition that
02:09and the obvious takeaway is that this is
02:13a competitive problem for Samson right
02:14makers what you've seen in the high-end
02:16segment and no man what Apple hasn't
02:19done is change their pricing policy at
02:20all so there's a - there's a there's a
02:22there's a one that's quote free unquote
02:24on a two-year contract in the USA $450
02:27thing which is still high-end that's
02:28fine that's goes from the 4s to the 5c
02:31and then the 5s drops the last year's
02:34flagship drops a hundred dollars and
02:35then there's a new flagship and then
02:37there's a then that the Plus which is a
02:39larger one is $100 more so it's in the
02:42u.s. it's $300 $200 $300 outside of the
02:45US it's you know $400 $500 $600 $700 or
02:49whatever the pricing turns out at um so
02:51the interesting thing here is as I say
02:53we're saying that when you look at the
02:54high-end segment that Apple was really
02:56the only place Apple competes they were
02:58pretty only got around half of that
03:00segment and the other half is high-end
03:02Android and almost all of that high-end
03:03Android is with bigger screens so is it
03:05an acknowledgment I can remember you
03:07know Apple always does this but they're
03:09dismissive of something that they don't
03:10do so larger screens are like yeah yeah
03:12Noah wants an iPad that can play and I
03:13thought the complaint video no one wants
03:17the tablet with a smaller screen you had
03:18to get a PEZ this is Steve Jobs said you
03:20need a pencil Sean or your fingers to
03:21use a 7 or 8 inch tablet well you know I
03:24know I mean everything is wrong until
03:26it's right never things were until this
03:27one who cares um clearly what's emerged
03:30is that you know people do have are
03:32willing to use these slightly larger
03:33screens and because of all the stuff
03:35that you can do on them and so Apple has
03:36just shifted they shifted twice once and
03:38they made that the iPhone 5 was slightly
03:40bigger oh now it's slightly bigger again
03:41it's worth noting incidentally that the
03:43phone itself is very thin it's
03:44noticeably thinner than the 5 so the
03:46overall weight is that much smaller I
03:48mean it seems like effectively the
03:49metric we've gone from is the length of
03:51your thumb to the size of your pocket
03:52right and of course with the phablet 50%
03:55of the buying population is going to put
03:57that in a bag so again it doesn't really
03:59matter at all right interesting actually
04:01you know you know apples you know foray
04:04into China was possibly the 5c and that
04:06really didn't go anywhere and the 6 plus
04:08with fabolous seems to be the right way
04:10to potentially go into and get into
04:12Asian markets finally I wonder outside
04:14of you in the US but I think it's mostly
04:16the Asian strategy it does feel like the
04:17yeah when you look at the numbers the
04:19phablet has done very well in south
04:22well generally in East Asia gone really
04:25nowhere at all anywhere else I mean it
04:28celled a little bit but not very much
04:30and so Appl is effectively addressing
04:34that segment and also of course
04:35addressing the mainstream market they
04:37just wants a slightly bigger firm that
04:39can show slightly more stuff and what
04:41they're not of course doing is coming
04:43out again with a new cheaper product
04:44that can go into the Chinese market now
04:46it will be interesting I would suspect
04:47that the hundred dollar cheaper iPhone
04:505s will do a lot better in China 5c did
04:54last year at the same price the really
04:58the dynamic in China was if you can
04:59afford $500 it was actually a lot more
05:01than that because of all the taxes if
05:02you could afford what the 5c costs you
05:04could afford the 5s and you didn't want
05:05to walk into a nightclub with the cheap
05:07one in a very sensitive segment very
05:11quickly I always there's nothing new
05:15that's nothing new there they just did
05:16it a brief recap of the features
05:17obviously they've adjusted it to include
05:19support base for watches and for
05:21payments which well yeah sort of what
05:26the from from the gasps and the use in
05:29the boos in our room with the big news
05:31of the day so payments and and the watch
05:33let's start with payments outline is for
05:36for us what what if they'd announce so
05:40much like you can kind of see the
05:44building blocks that they've had there
05:45before with a secure element for the
05:46fingerprint so the way that this works
05:48is you buy new iPhone you log in with
05:51your Apple account that you've already
05:53got and it automatically loads the
05:55credit cards that you have in iTunes
05:56into it if you don't already have a
05:59credit card in iTunes then you can wave
06:00a credit card in front of the camera and
06:02it will acquire it into the system and
06:05then there's a couple of moving parts
06:08first of all they have a deal with Visa
06:09MasterCard and AMEX to support this but
06:12you're issuing Bank has to support it as
06:13well so it's not enough just to be a
06:15Visa card it has to be a Visa card to
06:16form a Citibank or from one of the u.s.
06:18institutions in the US only the supports
06:20it then the other part of the moving
06:22part say you've got the code then you
06:23once you've acquired the card into the
06:25device you go into a store and the store
06:28has to have an NFC which is this very
06:31short-range wireless technology that has
06:33for a decade and gone nowhere which
06:35we'll read about in a moment so you
06:36acquire the card into your phone you go
06:38into the supporting retailer you hold
06:39your phone up to the till and passbook
06:42appears and your card appears on the
06:43screen and you hold your finger on the
06:45fingerprint reader and it's done and so
06:48and so the big difference here is we've
06:50had all of these payment systems that
06:51have floated around before and it was
06:53always where you've got to take the
06:54phone out you've got to turn it on
06:55then you've got to open the correct app
06:57you've got to choose the correct card
06:58then you hold it up then you've got to
06:59enter a PIN number then you press GO and
07:01it was actually more hassle to do that
07:02than just to put your card out and and
07:04do the card PIN or I'll swipe the card
07:05whereas with the Apple experiences you
07:07hold the phone up to the thing and you
07:09have your finger on the application is
07:12really the touch yeah exactly so it is
07:14it's so there's so the whole user flow
07:16of it it's a combination of the touch
07:18flow and passbook application that
07:20they've previously been using for
07:21tickets which means it really is quicker
07:23than using a card so Frank I want you to
07:27you know Tim Cook did that twice on it
07:29almost came off as a joke because it
07:30happened so quickly he's like look if
07:32you blinked you missed it but is that
07:33the whole point and is that one of the
07:36things that was holding you know us all
07:38back from using NFC or payments like
07:41this well there were two things holding
07:42back NFC one was the user experience and
07:45it looked like from the demos and often
07:46they have solved that problem the other
07:48was the availability of an NFC reader at
07:50the merchant the good news on the NFC
07:52readers is that the United States is
07:55about to go through a massive deployment
07:57of EMV which is Chip and PIN credit
07:59cards the same reader will also support
08:02NFC so merchants won't need two
08:03different or two different upgrades so
08:06it looks like there's a lot of momentum
08:07on the merchant side to be able to take
08:09these newfangled iPhones as payments and
08:12I think there's a there's a broader
08:13point here which is as we've said NSE
08:15has been around forever and gone nowhere
08:16and one problem with C was the the lack
08:21of the right user experience in the
08:22device the other was is this general
08:24lack of momentum or critical mass behind
08:27adoption anywhere so the retailers
08:29didn't have the that couldn't read them
08:31and had no incentive to get them and now
08:33the us shift to EMV is gives them an
08:35incentive for that the meanwhile you
08:38know from the device point of view
08:40Android has had NFC for a couple of
08:42years but you knows like one device or
08:44two devices or devices so there might be
08:46a couple of hundred million
08:47devices in market that notionally have
08:49NFC but nobody knows and nobody knows if
08:51their device has NFC on I wonder if this
08:52kick starts Androids it's because Apple
08:55is because Apple can say there is one
08:57device and it's in every device it gives
08:59a lot more clarity like every new iPhone
09:01has this and because as a market scale
09:04that Apple has uniquely kind of in the
09:05USA with 40% of smartphones they could
09:08then go to all the banks and all the
09:10retailers and say this is all going to
09:12work and let's all just you know get
09:15behind and push which is kind of what
09:16for example the Japanese operators were
09:18doing in Japan 10 15 years ago that they
09:20would say every phone every retailer
09:22every card it all just works and then we
09:25can try and get the flywheel going with
09:26containers and that's what Google could
09:28never do because it had such a different
09:29approach so let's use Japan or Korea as
09:31an example did it work and is everyone
09:34using it well yes No
09:37so when you look at the numbers in Japan
09:40it worked pretty well for things like
09:42transit cards it worked very well for
09:45things like loyalty cards and Japan is a
09:47very loyalty card heavy market like the
09:50US unlike for example the UK where I
09:52came from so I was kind of startled when
09:54I moved here that every corner grocery
09:55store came in to offered me a loyalty
09:57card which just doesn't exist in Europe
09:58in the same way right well but then
10:00nobody in Japan uses credit cards I mean
10:02in Japan you quadrilogy you go and pay
10:04your taxes in cash you get $15,000 at
10:07and you've put them in a bag and you go
10:08to the post office and pay your taxes so
10:10it's difficult to extrapolate too far
10:13from Japan or South Korea is they have
10:15these sort of market peculiarities I
10:17think the core issue here is that you
10:20kind of know what Apple is trying to do
10:22is remove all of the building all of the
10:25obstacles and get all of the building
10:27blocks all locked together and all kind
10:29of synced and turning mixing my
10:30metaphors here get all the gears turning
10:32at the same time in the same direction
10:34with one kind of completely integrated
10:36product and I think the problem that
10:38Google has had is because of the sort of
10:40launch early launch often an iterate
10:42approach you've never had a complete
10:44solution it's a little bit like trying
10:46to launch FedEx with one city in one
10:47airplane you know it doesn't work you
10:49have to have 50 airplanes and 200 trucks
10:51and row 20 cities before it starts
10:54working and that's I think the approach
10:55should Apple has been trying to take the
10:57proof in the pudding is going to be the
10:58user experience if it's
10:59as simple as taking your phone out
11:01putting your thumb on the touch ID and
11:03you know touching the NFC sensor at the
11:05retailer then great but I think that's
11:07gonna be really the critical thing
11:09that's gonna actually drive adoption
11:10because that's what I think I think
11:12that's where the concern is I said do
11:13you think that they have they and came
11:15out of the gate at least with enough
11:17partnership to sort of prime the pump on
11:19this I think they probably did yes I
11:22mean that's it's also worth noting
11:24there's a bunch of issues around for
11:25example the data breaches at Home Depot
11:27and target which tend to reinforce these
11:29kinds of trends there's an interesting
11:32thing here that that's worth thinking
11:34about though which is once you
11:35virtualized the card what do you do next
11:39because the model that Apple is talking
11:41about now is well you know I apply in
11:44the mail for my Capital One credit card
11:46and it arrives right and then I wave it
11:48in front of the iPhone camera and it
11:50gets acquired into my iPhone and then I
11:52presumably put the card in a drawer
11:54shred it or something but that's not
11:56that's a bit like saying well the way
11:58you do digital music is you order a CD
12:00on Amazon you rip it into iTunes and
12:02then you sync it with your phone that's
12:03not that's clearly not the end point
12:05where this is gonna go and so you can
12:08ask well okay what happens to the access
12:10right now Apple is saying well no one
12:12gets access to the payment information
12:14the way healthkit works is there's a
12:16repository of healthcare information and
12:18apps Canales core access so what happens
12:20if mint gets to ask for your payment in
12:22from all of cause that's bad example
12:23because mint has your bank but what
12:24happens if an application could ask for
12:26your payment information what happens if
12:28I could download the American Express
12:29application and it can say can I see
12:31your payment information oh I can give
12:33you a better deal press here
12:34right then in 15 seconds later a new
12:37American Express card arrives on your
12:39phone so once you virtualize it all
12:42sorts of other interesting things start
12:44becoming possible what does do we have
12:46any evidence and Frank chime in here
12:48from the iTunes store for example I mean
12:50there's been no evidence as far as I can
12:52tell that Apple goes in that direction
12:54it's very much sits in the middle in
12:56between these vendors well I think
12:58they're interested in being providing
13:00platforms I mean there were always these
13:02sort of fantasies that Apple is going to
13:05become the giant alt person it's going
13:06to do everything and they always when it
13:08comes to the crunch they always back
13:11we make phones right that's what we do
13:13right we're not an airline you know
13:15we're not a mobile network operator
13:17we're not a movie studio we make boxes
13:20with circuit boards in and I mean we're
13:23talking about this earlier that you can
13:24describe Apple as a sort of club where
13:26the price of membership is buying a new
13:28box every two years and the benefits of
13:30being a member of the club keep
13:31expanding in terms of all these sort of
13:33incremental service and abide you're
13:34seeing a phone or iPad or watch which
13:37will come on to it in a moment
13:39the other interesting thing we should
13:41just kind of put on the table to talk
13:42about is that there is an API for Apple
13:45pay so your iPhone app can instead of
13:51requiring you to type in your your
13:53credit card number it can just ask for
13:55the credit card that's on the phone so
13:57there's a buy with Apple pay button in
13:59your app and up comes a little panel
14:01with a fingerprint scanner and says
14:03you're going to pay you BRR
14:05$35 and you put your finger on the
14:07scanner and it goes through describe for
14:09me or translate for me Apple pay is sort
14:13of analogous to what we have in the
14:15world today is it like PayPal is it like
14:18no I don't think so at all I think it's
14:21it's that well this is kind of my point
14:23about how far Apple moves into adjacent
14:25Valley chains which is they kind of
14:26don't you know Apple didn't become a
14:29music label for example right they just
14:31became they replaced our records they
14:33didn't replace Universal Music or EMI
14:35and they're not replacing Citigroup here
14:39with the way PayPal would they're
14:41writing the credit card rails that
14:42already exists exactly they're just
14:45taking that piece of plaster and
14:46basically Apple kills little pieces of
14:47plastic so they kill floppy discs and
14:49then they kill CDs and now they would
14:51like to kill your credit card but the
14:53card with all the actual doing of being
14:56a credit card company is not about
14:58supplying you with little pieces of
14:59plastic it's running a payment network
15:00and thinking about fraud and correctness
15:03well and offering you credit and exactly
15:05sure that's what it needs to be a credit
15:06card company and Apple has no interest
15:08in doing that right anyway than they
15:09have any interest in you know sending
15:12guys with interesting haircuts to
15:13nightclubs that's really morning to look
15:14for bands you know they don't want to do
15:16that I just want to sell the mp3
15:18to be your wallet andyb contrast what's
15:20happening in Apple and with what's
15:21happening in Android land if you've
15:23tried NFC payments in Android land you
15:26have lots of stakeholders with their own
15:29applications clamoring to be your wallet
15:31so you have Isis now known as South card
15:34if you have the carrier itself had a
15:38wallet sprint wallet you had Google
15:40Wallet wanting to be the wallet and
15:42basically it's like when you have to
15:43choose an application to handle an
15:45application type right get to the
15:47terminal to say which wallet do you want
15:48to handle this in Apple and it's gonna
15:50be Apple and the smoothness of the user
15:53experience you can deliver when you
15:54there is one dominant wallet as opposed
15:56to five or six clamoring to be the
15:58wallet is gonna be hard to beat yeah I
16:01was gonna ask let's before we move on to
16:03the watch I mean do you think that you
16:05know we're gonna start seeing people
16:07swiping their iPhones at stores and
16:09we're touching it whatever whatever the
16:12action is I think you're gonna see a lot
16:14of people using it yeah I mean the the
16:17combination of the the the ease of use I
16:22think is the interesting part I mean
16:25this has always been the question both
16:26with payments and with watches has been
16:29is not so much the what as why you know
16:32yes you can put a card into a phone
16:34you've been able to do that for five
16:35years now Apple has made that easier
16:38they haven't given you any sort of
16:40compelling reason why you do it other
16:42than that it's sort of less hassle than
16:45taking your card out and swiping it and
16:47for the last 10 years people have said
16:48well it's not that much hassle right to
16:50take your card and swipe it it's not
16:53broken right and I think this is where
16:55as say for example the record industry
16:57was broken because they made you buy 10
16:58tracks instead of the one that you want
17:00it for example so you think well ok
17:03there's nothing wrong with this way of
17:04doing it it's a pursue the other way of
17:06doing it and you'll you'll see people
17:07doing it it's not quite clear what
17:09massive problem this souls from an end
17:12user other than while it takes you a bit
17:14longer to take your card out of your
17:15wallet when you get to the store see I
17:18have gone to stores where I had
17:19forgotten my wallet my plastic but I had
17:21my phone and I was just so frustrated
17:23that I couldn't pay so for people who
17:25like me are very absolutely awesome well
17:27this gets me back to the point I was
17:29making earlier about well what else can
17:30you do once you virtualize the
17:31if you could get to the point that you
17:33know I could you know I can get a card
17:35in five minutes instead of well if I
17:37lose my card wouldn't you if I could get
17:39the thing in five minutes instead of
17:40waiting for the mail I mean maybe that's
17:42the point this isn't so much about
17:43killing the pay at the card it's about
17:44killing in the paper mail or you've got
17:46to wait to take a very common analogy
17:48like this is probably more of a vitamin
17:50than a painkiller at this point right
17:51like you're talking about like what is
17:53truly mobile payments getting into a you
17:56know ordering a lyft car getting into it
17:57and then not having to take your phone
17:59out they automatically charge you and
18:01you send the rating and we're after the
18:02fact that is truly mobile payments so
18:05one can kind of think about Apple pay
18:07NFC you know this this idea of
18:09facilitating offline commerce you know
18:11brick-and-mortar commerce as a bridging
18:13solution until kind of you know maybe 10
18:1620 30 years from now when like
18:18everyone's got mobile apps and mobile
18:20devices and tablets and and even every
18:22ever retailer every supplier and every
18:24buyer as well has all of these devices
18:26and apps and this can all happen
18:28but I think until then like you need
18:31this potential solution potentially but
18:32I think it may just be a vitamin at this
18:34point I mean I think this comes I mean
18:36it's a good sort of way to lead into the
18:37eight to the watch because I think what
18:39I was saying last week was that for both
18:41of the things that were rumored that
18:42have both come true which is based of
18:43watch and the payments you can certainly
18:48see how you could make a thing the
18:50question is and the thing might be
18:51really good but it's not entirely clear
18:54why you want the thing in the first
18:55place it's worth talking about this
18:57vitamin versus painkiller thing from the
18:59merchants point of view so something
19:01very interesting is happening next
19:02October which is the liability shift so
19:06when the liability shift means is who
19:08owns the liability when you have a
19:11fraudulent credit card today it's the
19:13card associations or the issuing banks
19:15in October 2015 that will shift away
19:19from the payment networks to the
19:21merchants or the the card issuer and so
19:28if you don't have one of these EMV or
19:30NFC devices and somebody swipes a
19:33fraudulent credit card all of a sudden
19:35you as the merchants for the first time
19:36are responsible for the losses as
19:39opposed to just pawning it off on your
19:40card issuer and so when that shift
19:42happens the merchants definitely have
19:44a painkiller here which is they'd love
19:46for you to use your iPhone or another
19:48NFC device because then they can't bone
19:50the fraud associated with somebody
19:52owning a fraudulent credit card and
19:54again for security reasons if I lose my
19:56phone it needs my fingerprint associate
19:59with my phone and make a payment and
20:01there it seems fairly yeah so I mean we
20:04can dig into this little bit more so
20:05basically the phone does not have your
20:06card on number on it right it's a set of
20:09tokens which neither Apple nor the
20:11retailer itself ever actually see what
20:14they're calling the secure element yeah
20:16so it's his complex set of crypto which
20:18means that the in nobody actually sees
20:19the card number it's just that your card
20:21issuer knows that is you which of course
20:24speaks to the problem that we saw a
20:25target of target systems being hacked
20:28well in this case target we've never
20:29seen the cards in the first place it
20:31also means that as a phone disappears
20:32even if it's unlocked somebody can't get
20:34your card on my cell phone all they've
20:36got is these these things and of course
20:38equally Apple you know you can revoke
20:39you can wipe your card with your phone
20:41remotely the remote wait so you and your
20:45cards have not been stolen so you don't
20:46need to wipe your you don't need to
20:48cancel all of your cards you just remote
20:49wipe the device the other part of this
20:51that that is very different from Google
20:53is that Apple doesn't know at least
20:55according to Tim Cook what you bought
20:56how much you paid for it I mean there's
20:58none of that sort of loop of information
21:01act Li well this is the interesting
21:02thing about health as well so Apple is
21:06making this repository in iOS 8 that
21:08stores all the health information from a
21:10watch from anywhere Abell that you have
21:12anything you input into it any app on
21:14the device can ask for that with
21:15permission Apple never sees it and
21:17that's obviously very different from the
21:19Google approach and it's something that
21:22Apple seemed to be trying to build up as
21:24a marketing point obviously we saw
21:25Microsoft try and build privacy as a
21:26marketing point and kind of fail but
21:29Apple is kind of is kind of keep
21:30circling around and coming back to this
21:32point that we don't need to know
21:33anything about you one business model
21:35does not depend on us knowing stuff
21:37about you it's not clear how much we all
21:38consumers actually care about this stuff
21:40but it is kind of an interesting point
21:41of difference yeah right
21:43apples made the money it wants to make
21:44from you as soon as you buy the iPhone
21:46right doesn't need an ongoing stream of
21:48advertising revenue on back on the back
21:50of that for it to make its business
21:53model work so the watch did you benedict
21:56pick one up put it on your wrist
21:58wave it around picks it up it on my
22:00wrist it's not finished the one that you
22:02can wear just has a looping video the
22:05one that you can look at is firmly on
22:08the wrist of the Apple employee and
22:10they're in a scripted tree that they
22:12don't deviate from so you can point it
22:14that out but they won't open it for you
22:15okay so are they done yet you know they
22:18said it's not done it's not shipping
22:20until a spring that comes a couple of
22:23observations one is it comes in two
22:25sizes the small one is perfectly small
22:28it doesn't feel like you're wearing a
22:29brick on your wrist it's not you know
22:31it's not a five-dollar quartz watch it's
22:33incredibly tiny and passing but it's not
22:35a big lump anymore they're not talking
22:38about battery life at all and they've
22:39not given any technical specifications
22:41they're kept saying all day all day all
22:43day but they clearly expect you to
22:45charge it every night every night it's
22:46kind of okay and the Android stuff on
22:49the market most of them seem to more or
22:51less make it all day and since Apple has
22:53obviously much tighter control of the
22:55hardware and software you'd expect them
22:56to do a bit better I mean they tend to
22:58do 10 or 20 percent better with the
22:59phone so they should do that on the
23:01so to be clear it it sounds like this
23:03watch will last a day it should do yeah
23:06that's certainly what they're promising
23:07so it seems like an accessory yeah so
23:10it's not a replacement
23:12well the yeah but Android wear isn't
23:13kind of replacement either there's a
23:14basic battery issue here which if you
23:16cannot stick a 3G chip in a device that
23:18small with a color screen and have it
23:20last all day it just you know it's
23:22really really hard to do that at the
23:24moment so all of these things need some
23:26kind of other thing which means a phone
23:28and it needs this needs to be run from
23:30an iPhone just as the Android way needs
23:32to be run from an Android format from an
23:33iPhone Android phone now that said
23:35there's a really big difficult if ur ins
23:37because if you look at Android wear it
23:38is really essentially a remote screen
23:41for Android I mean it's all you've been
23:42wearing one for a while but you know
23:44isn't fundamentally it's about
23:45displaying and interacting with
23:47notifications on the device plus a few
23:49other things like Android like like
23:50Google now and they've just started
23:52rolling out an SDK that lets people
23:54start writing apps for it but that's
23:55kind of a secondary focus for Apple this
23:57is a this is a standalone device I mean
23:59except that it's got like a remote modem
24:01and it's got its I can help you can put
24:04apps on it it's got a full-on UI for
24:06choosing different apps it's much more
24:08of a little computer
24:09it's a standalone device or device says
24:11we were talking about and what sort of
24:12sort of buckets does it you know fill as
24:16a as a watch it's a bit like Apple TV is
24:18supposed to chromecast again chromecast
24:20is just a remote display Apple TV it's
24:22more like a little thing of its own
24:23right you sort of need an iPhone at some
24:25point but you can kind of use it without
24:27as well and I think that's the same
24:28thing here um and it's a platform and so
24:31the thing that was I was really strongly
24:33reminded of was the original iPad where
24:38you know the demo versus again the point
24:43that one of my colleagues were saying it
24:44felt like there's our kind of kitchen
24:46sink thing going on here it's like how
24:48many different use cases can we show you
24:49it can do this it can do this it can do
24:51this it can do this and the underlying
24:52point is it's a piece of glass and it
24:54can do anything now that was the insight
24:56of the iPad it was the inside of the
24:57iPhone it gets transformed by whatever
24:59app is running on it and so then when
25:01Apple launched the iPad they're like
25:03well it can do spreadsheets it can do
25:04books it can do video it can do the web
25:06is I wouldn't really know what people
25:07are gonna do with it so let's just show
25:09you a whole bunch of things you can do
25:10and see what sticks and it's pretty
25:12clear in hindsight that for example
25:13Apple wouldn't probably wouldn't have
25:14bothered doing but books right was just
25:17kind of ahead I mean and they made a
25:19they made a keyboard for the original
25:20iPad and now it's the same thing you saw
25:25here it's like it's a P a little piece
25:26of glass on your wrist and what can you
25:28do with it well you can do anything it's
25:29got UNIX and it's C for you on it or
25:31whatever you can do on a piece of glass
25:32that size it can do so let's try and
25:34work out what that might mean
25:36whereas Android wear is much more kind
25:38of reflecting the two companies
25:39philosophies Android wear is an end
25:41point for the cloud where is iowa where
25:44is apples and an Android phone in a
25:47sense is more and more an end point but
25:48let's just make let's just make a you
25:49know clear distinction here like you
25:50know the similarity here is you know the
25:53card metaphor is quite alive and well
25:55right now with the glances right yeah so
25:57this is like Google now cars and Android
25:58wear apples calling glances you have
26:00these you know lightweight apps that can
26:02be you know whether it's a fitness app
26:04and exercise app a workout app a clock
26:07app whatever the case might be and you
26:09swipe and you can can even have that
26:11kind of really lightweight experience
26:13that Android wear also has that I've
26:15been experiencing with the watch that
26:16I've been using yeah I think that's what
26:18I mean you can kind of over systematize
26:19this there's just kind of that slight
26:21fee that we're kind of needs to be lit
26:23up by Google whereas the and what the
26:28Apple watch doesn't really need to be
26:29lit up by something somewhere else
26:31in quite the same way and so it requires
26:34an iPhone 6 or a knife I don't think the
26:36kind of enable it in some way but it's
26:38not a yes yeah but it's not a remote
26:40screen in quite the same way people
26:45running in the video and they were using
26:47that to watch they had to have an iPhone
26:48with them because the GPS you know had
26:50to be required in order for them to be
26:52able to run their various routes I think
26:55about it is look Apple want you to be
26:57part of the club they want to have as
26:59many products in that club to make club
27:01membership super compelling right and so
27:03the the watch makes you a member of the
27:07club requires an iPhone the anchor
27:09tenant by the way the thing that gets
27:10you in the club is the phone and
27:11everything else help what makes in my
27:13view is going to be an accessory to the
27:16the watch is an accessory to the phone
27:17the Yosemite the next version of the Mac
27:20OS makes the Mac an accessory to the
27:22phone and it really just makes club
27:24membership that much more compelling yep
27:26but it all ties you into the Apple
27:28ecosystem and you're not going to see
27:30watch that works with an Android phone
27:32right like there's just not going to do
27:33that yes so the the interesting thing is
27:35if you look at but going back to the the
27:37app the new iPhones you know would you
27:39buy the LA i phone 6 plus and iPad Mini
27:43probably not because they're pretty
27:45similar in size would you buy a mat and
27:48iPad air and an 11 inch MacBook Air
27:50probably not cuz they're really close in
27:53size would you get a watch an iPhone 6
27:57an iPad air and a 27-inch iMac maybe so
28:02it's kind of a question of well which
28:04adjacent seized you want and on spectrum
28:06now you can see they're kind of taken
28:07this to a logical extreme if you look at
28:10Samsung which has a device at every 1/2
28:12inch increment from 2 inches to 15
28:13inches or more if you include the TV you
28:20raise the question of why the why part
28:22did I feel like we were much closer to
28:27the we were why in the faith in the iPad
28:29it was much more of an iPad why I
28:31thought which is well there's clearly
28:35here it's not quite clear what
28:39but we've basically got a little UNIX
28:41computer on your wrist and I think the
28:45other piece to this incidentally and
28:47again I think this comes back to the
28:48iPad is if you look at all the other
28:50tablets before the iPad well they will
28:53all rectangular screens that did touch
28:56so like there's nothing new about the
28:58iPad but of course there was and I think
29:01that's the other thing here is when you
29:03look at the hard just the hardware
29:04design of it turned off forget about the
29:05operating system Apple have kind of
29:07nailed a nice thing that you would wear
29:09whereas all of the Android devices are
29:11still I think more kind of mine well I'm
29:13waiting to get my moto 360 tomorrow from
29:15Google i/o well it's that well the
29:16motors now so I so a bunch of people at
29:19the event today with a 360 it's it is I
29:21would say double the volume maybe more
29:23the 360 is double the well the 360 is
29:25double the volume of a small Apple model
29:27maybe more so Frank as we were watching
29:30this we were talking about I think it
29:34Kevin Lynch were trading doodles and
29:37heartbeats and things like that and you
29:38brought up the question of community and
29:41whether some of the say fitness apps and
29:44or you know other apps that are already
29:47out there they do a really good job of
29:48building community and so does Apple
29:50need to have this community built in do
29:53they build it themselves how these
29:55questions so most of apples community
29:58and social efforts have failed right
29:59they took ping out of iTunes deme Center
30:02I still don't know anybody who uses Game
30:04Center so those things have not worked
30:05and so it's not instant death for
30:08or straw Bo or fitness pal by people who
30:12have built very vibrant communities so
30:14to be interesting to see if they take
30:15another whack at it let's see if they
30:17can build a genuine Apple community it's
30:19very ironic that apples failed in social
30:21because they have the biggest fan
30:23community for their products of all time
30:25but they've never been able to part they
30:27that into an active engaged audience
30:29except on the Apple forum which is the
30:30world's greatest sort of answer
30:32community I think there's a there's a
30:34broader point in here which is again if
30:36we go back to the the celebrity photo
30:38leaks of last week that you know Apple
30:41always talks about owning the whole
30:42experience and controlling the
30:44underlying tender core technology and
30:47they make their own chips you know
30:48they've got they make their own
30:49processes they make the chips and
30:51integrate everything for the watch and
30:52the phones you go and look at what they
30:55do online and yes iOS a is full of cloud
30:58and yes is all these really tightly
31:00integrated and very clever things that
31:02use the cloud to enable these devices
31:04but you know the email is running on
31:06Oracle they find my phone is running on
31:08something else the photos are sitting on
31:10a zoo not there's anything wrong with
31:11the desert but it's not it's all kind of
31:13third party stuff tied together and that
31:17results in good experiences and good
31:19products but every now and then you see
31:21the crack so for example the thing with
31:22the photo leak was well some bits of
31:24iCloud used two-factor authentication
31:25but other bits just don't because it's
31:28not built on one common platform that
31:30Apple designed from the bottom up to do
31:32iCloud I mean there was a great blog
31:34post a year a couple of years ago by
31:36someone who had been at Amazon and went
31:37to Google talking about how everybody
31:39everything at Amazon with one platform
31:41and all Amazon products and services
31:43were built on top of that platform
31:44whereas everything at Google was built
31:46one off next to each other it's like a
31:47new thing and that Google had to change
31:49and a lot of what you've seen in the
31:51enterprise side of Google would indeed
31:52it has been about turning into a
31:54platform Apple does not have a platform
31:55in the cloud at all and you kind of see
31:59that that what you've got here are lots
32:01and lots of endpoints that are delivered
32:03and do great stuff but they start from
32:06the user experience you know it's like
32:08saying well we're going to have an email
32:10it's like Google saying well we're going
32:11to have an email service so we're going
32:13to be an email service and then we'll go
32:15off and work out what the backend
32:16service provision is and we'll just like
32:18well by the Oracle one or the SA P one
32:20and then we're gonna do maps and we'll
32:21you know it's not built from the
32:24architect from the bottom up it's built
32:25from the top down Frank last thoughts
32:28well I think again I'll go back to the
32:30phone being the anchor tenant you could
32:32buy your phone every two years right and
32:34everything else is an accessory that you
32:35buy less frequently than that and as
32:37long as they've got you on the upgrade
32:38treadmill of every two years you buy
32:40this new anchor tenant it'll drive the
32:42need for the other accessories on
32:43slightly longer time frames and then
32:45apples happy you're part of the club yep
32:46and each access wheel locks you in so
32:48you've got the phone you've got the ones
32:49you've got the watch then your next
32:51phone is that much more likely to be an
32:52iPhone and once you've got the iPad then
32:54your next watch is that much more likely
32:55to be an iwatch and so on so they all
32:57interpret reinforce each other and
32:58credit cards and debit cards at the
33:00yeah all of that integrated into the
33:01Apple ecosystem well I will be looking
33:04at your wrists for the next couple of
33:06months and also at how you're paying for
33:09things when you take me to lunch
33:11thank you gentlemen thank you thanks
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