00:00welcome to the a 16z podcast i'm michael
00:02copeland and i am here with my main man
00:05in mobile benedict evans can i say that
00:08out loud you can say anything you want
00:11benedict welcome you did an interesting
00:15blog post recently about how at a high
00:19level like all the questions we've been
00:21you know asking and trying to answer
00:23over the last five to seven years aren't
00:26the questions you want to ask or answer
00:27anymore so give us a give us a little
00:30bit of an overview of why why you want a
00:33new set of questions for mobile well i
00:35think so there's two parts to this is
00:38the old questions in the new questions
00:39and the old questions are things like
00:41what's going to happen to blackberry
00:42what's gonna have to Windows Phone
00:43what's gonna happen to knock here what
00:46is gonna happen to blackberry well I'm
00:48don't care anymore you know it's it's an
00:50interesting question for blackberry
00:51shareholders but they're not really
00:52relevant as part of the market right but
00:55the point is all those kind of platform
00:57or questions are done and we now know
01:00that Apple is selling the top 10% of all
01:03the phones on earth and that's growing
01:05steadily and Android takes the next 50%
01:08of all the phones sold on earth and
01:09that's growing slightly faster 10% by
01:13price of volume of ice all the actual
01:16phones and yet we also know that because
01:18Apple is through a bunch of reasons
01:20including the price and the operating
01:21dynamics their business they have a very
01:24large proportion of their customers at
01:25any developer or publisher actually
01:27wants and so they had 80% of all the
01:29e-commerce revenue on the Black Friday
01:31spending festival in the US and about
01:33half of global web browsing depending on
01:35which numbers you believe I it could be
01:36a third could be two thirds depending
01:38but you know they have a
01:40disproportionately large show of actual
01:42usage in value compared to the number of
01:43units they have and so apple's position
01:46seems to be fairly stable developers
01:47aren't doing any where users aren't
01:48going anywhere and Google's position is
01:50also very stable um they've kind of got
01:52but so they both one and they both got
01:53what they wanted and we've discussed all
01:55of this to death over the last year two
01:57years three years and actually we kind
01:59of know what the answers are and that's
02:01not really very interesting anymore and
02:02actually there's a whole bunch of newer
02:03questions about what's gonna happen next
02:05that are actually more interesting and
02:07more fruitful to discuss and so I kind
02:11of broke these down in
02:12you know kind of a sequence and I think
02:14when we can kind of kind of pick them
02:15apart one after another the first one is
02:17what happens to Android areum's Android
02:19handset manufacturers where that
02:21situation is now very unstable and the
02:23second question that follows on from
02:25that is what is Android itself going to
02:26be both what are those OEMs going to do
02:28is open Android going to be meaningful
02:30outside of China and what's Google going
02:31to do with Android and that in turn
02:34flows into well what is the interaction
02:36model going to look like because clearly
02:37that changes if the opportunity
02:38operating system changes and then you
02:40have kind of other questions like well
02:42what a Facebook and Amazon gonna try and
02:43do what's gonna happen wearables and
02:45what changes fundamentally as a result
02:47of the scale of the whole industry and
02:49so all of those things are kind of areas
02:51in which major things can change in the
02:53experience in the dynamics of mobile
02:55whereas arguing about you know Windows
02:57Phone or iOS versus Android is just kind
02:58of pointless really so and so we you
03:01expect major changes but again not in
03:03this sort of way that we've exactly I'm
03:06accustomed to seen so I mean if we go
03:08through those sort of one at a time you
03:09know there's been a question for two or
03:11three years as to what was gonna happen
03:12with Samsung which had taken half of the
03:14android market by volume and almost all
03:16the profits and yet hadn't really
03:19produced kind of clearly differentiated
03:20products and hadn't managed to produce
03:21any kind of ecosystem value on top of
03:23that right and we've now seen in the
03:24last three or four quarters that
03:25samsung's revenue was starting to sound
03:27quite badly and particularly with their
03:29sales of high-end handsets sagging very
03:31fast and there being the problem that
03:35they face is not so much with surgeons
03:36of the companies we've all heard of but
03:38just in kind of a flood of smaller
03:40companies that are riding on the whole
03:41shenzhen ecosystem and using the whole
03:43Shenzhen ecosystem for scale and so the
03:47kind of the question is well what comes
03:48do Xiaomi go manage to go global does a
03:50Chinese person manage to go global
03:52is it local players do we get new
03:53players emerging in so a new global
03:55player the skin of emoji is anyone going
03:56to be able to take on Android it's a
03:57high-end all of those things just kind
03:59of turn over and over because we know we
04:01don't know what the vendor landscapes
04:03can look like it's sort of like we're
04:04having the same the PC industry but
04:06compressed into five years instead of 20
04:08years right all the same sorts of issues
04:10are coming up has Samsung's experiences
04:13sort of taught the Chinese you know
04:15manufacturer or something I mean it
04:16seems like is the Android business not a
04:18great one to be in well Android business
04:21of itself is a bad business in
04:23you embrace being a commodity box
04:27shifter and there's a business to be had
04:29there it's not a great business but
04:30there is a business to be had there
04:32I think you see two or three things are
04:34different from Chinese vendors one of
04:37them is simply that they're managing
04:38they're trying to go international now
04:40which they have already done before the
04:42second is that they were embracing
04:44design and brand and marketing in a way
04:45that the Korean manufacturers have
04:48always struggled to do and so there are
04:51three or four Chinese manufacturers who
04:53producing handsets that are much more of
04:55a level of what HTC or Nakia were doing
04:58in terms of design and the kind of the
04:59skin on the interface rather than
05:02anything that Samsung LG is producing
05:04and it's kind of interesting well we're
05:10starting to yes Xiaomi is starting to
05:13think we're starting to go international
05:15but only to middle-income markets only
05:17to India and Brazil and places like that
05:18not to develop markets much harder for
05:20them to come to the USA but I think the
05:23deeper point is it's not so much the
05:25individual people who are doing this
05:27it's the broader thing was the old
05:29question was always how do you compete
05:30with Samsung scale and the answer is
05:32well maybe you don't need sounding scale
05:34maybe you can use the scale of the whole
05:35Shenzhen manufacturing ecosystem and
05:37that's kind of enough at least up to a
05:39point you know you reach a certain point
05:40that you kind of have to have global
05:41sales and distribution and so on but you
05:43know if you're doing five or ten million
05:44it's you know support or maybe you don't
05:46need to have what Samsung's built and
05:48what an ocular built before that I mean
05:49there's a that kind of leads on to the
05:52next question which is well you know if
05:54you're not a shell Don one of these
05:55companies why does it matter who it is
05:56it's selling Android phones if
05:57particularly if they're all a commodity
05:59anyway right and the answer is that it
06:01kind of bears on what it is that Android
06:02becomes because on one hand you have
06:06Xiaomi trying to build it differently
06:09Xiaomi is the first Android manufacturer
06:11that has kind of successfully built a
06:13differentiated software experience on
06:15top of Android obviously all in
06:17obviously all the manufacturers have
06:19sort of tried and not come up with
06:21anything that anyone particularly liked
06:22in China you have this kind of no-fly
06:26zone because Google services are absent
06:28and so everyone has to do do their own
06:30thing anyway and Xiaomi has managed to
06:33produce kind of a combination of what
06:35you'd get from Google
06:36what you get for Apple if you were
06:37spending three times as much and
06:38produced like a kind of a nice user
06:41interface and experience on top of that
06:42and then out I'm trying to take that
06:44global now when they go outside China
06:46they use Google services but the big
06:48question is given a no one's making much
06:51money from Android anyway B it's very
06:54hard to differentiate within the
06:56constraints that Google sets on you if
06:58you use Google's version of Android
07:00closed Android in F ed do you start
07:02seeing more people trying to deploy open
07:05Android that is to say Android without
07:06Google's constraints with our build
07:08trying to build their own set of
07:09services on top of that you've seen
07:11Amazon try that and fail Macy certainly
07:14fail in phones but they're sufficiently
07:16many kind of weirdnesses about the
07:18Kindle Fire phone that it's probably not
07:20a kind of a good test case overall and
07:24so it's not it's not out of the realm of
07:26possibility that HTC or algae or some of
07:28these other manufacturers well the
07:30problem for them to do it well the
07:32problem for them is that Google's
07:33contract says you're not allowed to sell
07:35fault a none compatible and open version
07:38of Android and it all if you do you
07:40can't sell a single phone that has
07:42Google services on it so you can't
07:44experiment but again this is to my point
07:47that you may start seeing new companies
07:49in those should have got nothing to lose
07:50and that may try and kind of create a
07:54really clearly differentiated offer on
07:56the back of that now there's a whole
07:58bunch of you can then go and I've go off
08:00and you know spend an hour talking about
08:02the dynamics of Android and why this is
08:04hard and which Google services are
08:06crucial in which or not very briefly it
08:08seems like the maps and the App Store
08:10crucial none of the other services
08:11matter very much so the question is okay
08:14are we completely sure it's impossible
08:16to compete with Google Maps and where is
08:18it impossible to completely compete with
08:20Google Maps what becomes of Nokia here
08:23for example does that become a viable
08:24alternative how many people care enough
08:26about maps that the gap is actually
08:28meaningful particularly at lower price
08:30points and does that become an angle for
08:32someone to go and call five or ten
08:34percent out of the German market with a
08:36hundred euro phone that runs Android
08:38apps but doesn't you see the Google App
08:40Store and what they use would be the
08:42Amazon App Store so there's this sort of
08:45maybe point in this now
08:48here which of course are our portfolio
08:50company signage n could be a participant
08:52in because it could provide a platform
08:54to do that and then so there's the thing
08:57that flows out of that whole set of
08:59questions and again you know each of
09:01these could be an hour-long conversation
09:02in their own right but then the thing
09:04that flows out of that question is okay
09:06well what do we mean when we say Android
09:10you know the reason that Android exists
09:13is because Google realized that
09:16smartphones were not a neutral
09:18transparent platform the where web
09:19browser was right and that the platform
09:21owner could do stuff and that they could
09:24block cool and so it shows how long ago
09:26this was Google were actually afraid of
09:28Microsoft rather than afraid of Apple
09:29and so they created this mobile phone
09:31platform who's been enormous ly
09:32successful for Google vast store of
09:35wealth for the entire manufacturing
09:36industry but conversation but by the
09:41same token if other people start being
09:43able to use and being able to succeed in
09:46what Amazon tried to do then you start
09:49changing the interaction model you start
09:51saying okay it's not it's not a three by
09:53four grid of icons anymore what other
09:55services are integrated how those
09:57services integrated and what are the
09:58means whereby which you access services
10:00what happens to web web pages what
10:02happens to apps what partnerships do you
10:06start having more of like an on deck
10:07conversation like which decks do we need
10:09to be on which OMS do we need to do
10:11preload deals with Dupre No Deal start
10:13becoming meaningful again and the thing
10:15that's I think sits underneath all of
10:17that is the question it's not entirely
10:20clear what Google wants to do with
10:21Android in the next five years it is
10:23entirely possible for example that we
10:26could be sitting here using Chrome based
10:28phones in which Android is a sort of
10:31legacy runtime but Google clearly wants
10:33to blur the difference between web pages
10:35and apps so chrome Chrome meaning web
10:37based yes back to the web yeah exactly
10:40with Chrome apps that are delivered over
10:44the web and of course that from Google's
10:46point of view there's that you get kind
10:47of a weird set of dynamics here because
10:49one level within Google they want
10:52everything to be the web because
10:53everything is indexable a nickel and
10:55that's you know what they do they can
10:57see everything they can link to
10:58everything they know what everything is
10:59they know everything works and if stuff
11:01a nap yes you can sort of deep link to
11:04it but it's your you know you don't get
11:05anything either British ifs richness of
11:07knowledge that they get from the web and
11:09so they'd like everything to be the web
11:10on the other hand the way that they
11:12retain control over the Android OEMs is
11:15with this API layer which is all about
11:18what happens on the handset and so if
11:21you go to a handset where everything's
11:22happening inside web views and all the
11:24api's are happening on as API calls on
11:26the web and payment center okay and all
11:29that stuff is done through a sort of set
11:31of neutral kind of API some what have
11:34you then it doesn't matter if you don't
11:36then the value of Google Play services a
11:37value of GMS evaporates right but you
11:40I'm so then at that point you know you
11:41kind of wind back and you say well then
11:43there's no difference between an iPhone
11:44and Android phone because you can access
11:45all the apps that you could get on
11:46Android you can get inside Safari on an
11:49iPhone so you get these kind of weird
11:51sort of shifting layers upon layers upon
11:54layers I mean the joke that I used in
11:55the UM and then and so that and that's
11:58just kind of Android but you describe
12:00the world that we are in already as this
12:01post you know Netscape post PageRank
12:04world exactly but it's it's both it's
12:05post Netscape but it and post PageRank
12:07but it's also not we haven't stopped yet
12:09so for twenty years we had this you know
12:11there's a period in the mid nineties
12:12where it was like is it go fur is it
12:14point cast is it push this song it's at
12:16and the answer was no it's a web browser
12:17and for 20 years we had this monoculture
12:21of saw mark we had this monoculture of
12:23the web browser and the mouse in the
12:24keyboard and that was the Internet
12:25experience and yes you had email and
12:27Skype and Spotify and a few things
12:28around the side but basically the
12:29Internet experience was a web browser
12:30and a kind of rectangular box on your on
12:32your monitor and obviously with
12:34smartphones we don't have that anymore
12:35so a post Netscape or perhaps pre
12:37Netscape and very obviously as a
12:39consequence without the PageRank model
12:40broke down as well but my point is there
12:42was his period of kind of swirling
12:44uncertainty from right in the Munich mid
12:4690s and then it settled on the browser
12:47we're in a period of swirling
12:49uncertainty now it's not clear that it's
12:50going to settle because you have you
12:53know you have a degree of sophistication
12:55in a smartphone operating system that
12:57you didn't have in the desktop operating
12:58system in quite the same way and the
13:00dynamics are very different because you
13:01have both Apple and Google kind of
13:03pushing very hard to differentiate on
13:04the stuff that happens so you know back
13:07to the sort of point about for Google
13:08you've got this kind of weird can send
13:10us a conflict because on the one hand
13:11you want everything to be on the web on
13:12the other hand you want to control
13:14api's and you want to kind of push
13:15services down on the one hand you're
13:17kind of pulling pushing services out of
13:18the web onto the handset but on the
13:19other hand you want stuff to be out of
13:21the handset onto the web depending on
13:23we're kind of which tier within Google
13:24you're thinking about um and then you
13:26have this other strand going on I kind
13:30of which is a kind of a broader Ann on
13:31Android point which is that you have
13:34both you have all these layers of
13:37aggregation and so you said okay is it
13:40are you is your service hard to find in
13:42the App Store is it hard to find it on
13:44the web in google is it hard to find
13:46inside Twitter or Facebook it's kind of
13:49which which aggregation system you
13:50buried in right and are those our
13:52different aggregate yes and then when
13:53you go to you know when you go to China
13:56then you have WeChat and Baidu maps and
13:58all sorts of other things which in
13:59providing again these new kind of these
14:01new kind of sites of aggregation and
14:03discovery and an agglomeration and
14:05everything else and so you get this kind
14:07of weird cycle where your unbundle
14:08websites out of the web browser into
14:11these multiple apps but these apps
14:13themselves have also bundles because you
14:15know there's just a whole stack of web
14:16pages and you can't get to individual
14:17ones and then you have Facebook or you
14:20have deep linking or you have messaging
14:22which will come back to interment and
14:23then you unbundle stuff out back out of
14:25those web pages and you bundle the back
14:27into Facebook or Facebook Messenger or
14:28Twitter and then you have all these
14:30notifications flooding out of all 45
14:32different apps on your phone so then
14:34you've got a stream of notifications in
14:35the notification panel and on both
14:37iPhone and Android that's kind of a
14:38broken experience just because there's
14:40too much stuff in it so it's like well
14:41how many different ways can recycle
14:43between aggregated not aggregated
14:45bundled unbundled messaging pages apps
14:47and back again all in one cycle I mean
14:50that's the line I used to mean I brought
14:51my blog post is a quote from a sort of a
14:53PG Wodehouse novel where someone says
14:54that when he catches up with somebody
14:56he's going to shake him till he Frost's
14:57and then pull him inside out and make
14:59him for himself and you feel like you
15:01know what's happening now is apps are
15:02kind of being pulled inside out and then
15:03swallowing themselves and then being
15:05pulled inside out again and I think
15:06messaging is an important kind of part
15:08of that because when you look at the
15:11sort of the shift actionable
15:13notifications you know message buttons
15:15and payloads and so on inside the
15:16notification so you don't even have to
15:18open the app and then you look at
15:19watches where a large part of the watch
15:22use case is in whether explicitly or
15:25implicitly it's displaying notification
15:27and messages or it's just displaying you
15:29know very very small pieces of
15:30information with a yes or no button even
15:32if it's not explicitly presented as a
15:34message right you get this kind of
15:36unbundling characteristic and then of
15:37course to the extent the waters take off
15:38that drives back onto the smartphone
15:40interaction model all of which have to
15:42say you kind of I mean this is again
15:44there's this line from this thing called
15:45zawinski z-- law that says every program
15:47attempts to expand until it can read
15:49email and you're kind of you're kind of
15:51getting that now on smaller phones which
15:53is like okay every every website
15:54attempts to expand until you can turn to
15:56get people to install an app and then
15:58every app attempts to expand until you
16:00can send notifications and then every
16:02notification expands until it becomes an
16:04app and then every now and then you need
16:06Gmail for your notifications or you need
16:08like a news feed aggregator for your
16:09notifications so we've got this kind of
16:11spinning or like a hall clock our
16:13washing cycle right everything goes
16:14round and round and round and as I said
16:16wearables feed into that because they
16:19impose this new kind of discipline on
16:22what some of your interaction with those
16:24things might be and our wearables in the
16:27way that they unbundle things sort of I
16:29don't know a in and the hegemony
16:33of Apple and Android or I mean do see I
16:35don't know about that
16:36I just think that they just add this
16:38other layer of complication what they
16:40also I think of course do is reinforce
16:42an app model as opposed to a web modeled
16:44incidentally I mean wearables I mean I
16:48wrote again I wrote a long blog post
16:49about the Apple watch I think this - I
16:52have two kind of tools - lenses through
16:55which to look at watches in particular
16:58and one of them is to think of when I
17:00saw the first iPad the thing about the
17:03iPad was if you wanted a very slim easy
17:06to use 10-inch tablet to carry
17:08everywhere with you it was clear that
17:09this was a white one and all the ones
17:12that had come before were not nearly as
17:13good but it also wasn't clear whether
17:15you wanted such a thing at all and the
17:17Apple watch is kind of the same thing
17:19that you know if you want to carry a
17:21little color screen on your phone which
17:23you can do certain computery things with
17:24on your wrist that you can do certain
17:25computery things with the Apple watch is
17:28the one and you know there'll be others
17:29you know maybe the next Motorola 360
17:30will be a bit better you know it won't
17:32be the only one but you know we kind of
17:33got to the point that the things are
17:34there if you want them but the question
17:36is well why do you want them
17:37you know they're small enough and the
17:38battery lasts all day but okay fine but
17:40do you actually want to do something
17:41with that and then the other lens that
17:43occurred to me was to think back to the
17:45original mobile phones because if we all
17:47been sitting here in 1995 saying do any
17:49of us need a mobile phone we'd all said
17:50no because we've got we've got
17:52telephones not telephone on your desk
17:54and you've got one at home and there are
17:55these payphones everywhere so why would
17:56you need a mobile phone and most people
17:58actually genuinely felt they were never
18:00in a mobile phone I mean I remember like
18:02mid early 90s mode over need I'm never
18:04gonna have a mobile phone and so again
18:07you know you look at watches and it's
18:09quite hard to work out whether they end
18:11up like kind of like a segue or Google
18:12glass right as this kind of blind alley
18:14or whether this is kind of a new
18:16category in the way that tablets are
18:18what all mobile phones themselves became
18:20then that's kind of another strand
18:22within this it again kind of flows out
18:24of this interaction model question and
18:26also I think flows out of the you know
18:29the thing that I said earlier that for
18:30Google you know me phrase it slightly
18:32differently Facebook and Amazon's
18:34motivation on mobile is very similar to
18:36Google's motivation which is that the
18:38web browser was this neutral transparent
18:40platform and you know having a web
18:43Facebook making a web browser or Amazon
18:44making a web browser would be kinda
18:46pointless thing to do and frankly Chrome
18:48on the desktop wasn't you know terribly
18:50valuable of itself it's when you're
18:52signed in on every device and you have
18:54Chrome on mobile and you have Google now
18:56and everything else that's when the
18:58browser became important but even then
19:00you know I don't think Facebook care
19:01what browser you look at I mean they
19:02don't it doesn't change make any
19:04difference to them if you look at them
19:04in chrome whereas on a smartphone a
19:06smartphone is not this neutral
19:07transparent platform you can have now
19:09and you've got nature search and you got
19:10widgets and all sorts of other things
19:11that change how you might buy things and
19:14that's a problem for an to change how
19:16you might share things and that's
19:17obviously a problem for Facebook because
19:20the smartphone is a social platform in
19:22the way that the web browser wasn't and
19:24so it's the thing that's emerged in the
19:26last sort of 18 months to two years with
19:27this explosion of messaging apps and
19:29what's happen in particular the you know
19:31on the desktop once you've added all
19:33your friends you don't want to do that
19:34again on another site you don't want to
19:35upload your photos again on another site
19:36you don't wanna keep checking multiple
19:38sites on a smartphone every app has your
19:40address book it has your photos it knows
19:42your location it does push notifications
19:44and so it's very easy to use lots and
19:46lots of different apps and switch
19:47between them and this is why Facebook
19:48has gone from being the only social
19:49network on desktop to being only one
19:51social networks on mobile and Amazon has
19:54a slightly less immediate problem but
19:56again if the mobile phone becomes his
19:58buying device and it's using the camera
20:00and location and everything else it's
20:01much easier and you know most obviously
20:03something like Apple pay you know one of
20:06the key reasons to buy something on
20:07Amazon particular on mobile is it's
20:09already set up with your account so you
20:10don't need to enter a credit card in
20:11well if you would Apple pay then you
20:13don't need that that all the aggregation
20:14goes away you load the app you push your
20:16finger on the fingerprint scanner and
20:18the app gets your credit card although
20:20it doesn't get credit card it just gets
20:21your payment details and you address
20:22anyway and so for both Facebook and
20:25Amazon they have the same problem the
20:26Google pad that you know okay where do
20:29we sit in this because we've been kind
20:31of we've been shunted off to one icon
20:33which is the browser icon or if we're
20:35lucky the Facebook icon with the Amazon
20:37icon how do we move further down the
20:39stack how do we move to that primary
20:41aggregation so that's my question I mean
20:43Google's response clearly was Android
20:50you know well Emerson and Facebook have
20:52had these more or less completely
20:54unsuccessful responses at that level
20:56let's say obviously Facebook app and
20:58messenger and what's happened so on all
20:59hugely successful but those are all like
21:01and the Amazon app is very successful
21:02but those icons yes what they haven't
21:04been able to do is move one level down
21:06the stack into the aggregation and the
21:08discovery layer or the phone itself so
21:10you know and so my question is is that
21:12necessary kind of as a fundamental
21:15strategic acquirement so you know if I
21:18pull down on my iPhone screen and start
21:21typing Apple decides what gets suggested
21:24to me Apple decides that it will show me
21:26restaurants and iTunes albums and
21:28appointments and so on as well as my
21:30appointments in my emails and so on
21:32right it doesn't there's no idea it
21:33doesn't decide whether it's Kendall at
21:35Amazon do that now in the future it may
21:36of course so all of the stuff is kind of
21:38changing but again Google sticks to
21:39Google search bar on the home screen of
21:41an Android device and so if you want to
21:43find out about something your how can I
21:46put it you open a web browser and then
21:48you decide whether you're gonna go to
21:49Google Amazon but on and on a phone
21:52you're in Google to start with right and
21:55then on an iPhone again you know Apple
21:57has see sort of different kind of
21:58shifting motivations obviously
22:02less of a competitor to both Facebook
22:03and Amazon than Google is but so we've
22:06seen Amazon's sort of bald-faced you
22:08know intention yeah so we had to fit
22:10well we have both so we had there was
22:12very briefly there was a Facebook phone
22:13in sort of pre smartphone dates almost
22:14we had Facebook home which failed
22:17obviously and that was kind of an
22:18attempt for them to move up the stack or
22:20rather move down the stack and we've had
22:23the Kindle Fire thing which is also in
22:25benefit for a bunch of reasons but I'm
22:27not sure either of those are kind of
22:28definitive at all and again this kind of
22:31comes back to the conversation earlier
22:32about well you know what is the future
22:35for a forked Android what is the future
22:36for open Android does open Android start
22:38working outside China and how can amaz
22:41and make its App Store work you know can
22:44Facebook start making layers that can
22:48what partnerships would Facebook do with
22:50a new handset vendor what would that
22:53what would the experience be on those
22:54devices who would would those be more
22:56appealing who might buy them what
22:58happened is if somebody starts selling
22:59an Android phone that comes with
23:00facebook home or some new kind of
23:02experience kind of combined and I
23:05suppose the thing for all of these is
23:07one can have a half hour conversation or
23:09when our conversation or two our
23:11conversation about the barriers to
23:12changing Android and and creating
23:14getting Android open Android to work
23:16outside China one can have a one or two
23:18hour conversation about apps and web and
23:19notifications in messaging the point is
23:21these are the questions the questions is
23:24well who were the Android vendors gonna
23:25be and why and then what's gonna happen
23:27is open Android is gonna work or not
23:29what is Google kind of do with Android
23:31wear is this kind of shifting barrier
23:33between apps and the web and
23:35notifications and messaging and it's
23:36sort of you know interaction models and
23:38you know aggregation at different lives
23:40all the levels of the stack where is
23:41that going to settle because I don't
23:42know what the answer is yet
23:44whereas in 2000 you know the answer was
23:46well as the web for the next ten years
23:47or the next five years we're not at that
23:49stage now where we know how any of
23:52and then there's one sorry at the same
23:55time though where we all began this is
23:57it you know both Google and Apple one
23:59does the next sort of phase mean that
24:01that sort of victory is not necessarily
24:03you know wealthy foregone conclusion
24:05well victory is always contingent in
24:07this in this space I mean I think the
24:10how can I put it is someone kind of
24:13complained at me that I was always
24:15problems at Google face a name I'm
24:17biased against Google emerging anti
24:19Google it's kind of I'm one of those
24:21kind of city but there's there's a point
24:23in here which is that the sort of the
24:25existential question for Apple is can
24:28you carry on selling $600 phones how
24:30many more of them can you sell does the
24:32market for $600 things kind of go away
24:35right but questions of you know you know
24:40you can't argue about apples control of
24:42our iOS they control it and kind of into
24:44internal product questions like do
24:46extensions work well yes or no not
24:48really kind of structurally important
24:50they're just kind of lot of questions
24:51and the same when you then turn to
24:54Android then the question is well okay
24:56what does I know it even gonna be in
24:57five years time is Google then you've
24:59gotta control it or not is going to
25:00Google is Google gonna turn it upside
25:01down and make you a chrome product yes
25:03or no is Xiaomi going to become
25:05significant is Amazon gonna succeed in
25:07breaking into and making it open Android
25:09a viable product in the USA those are
25:11important questions and they are not the
25:16answers to those are not settled yet and
25:18so another way of saying this is kind of
25:20you know the question of what an would
25:21is kind of matches to the future of
25:23mobile question of what iOS is doesn't
25:24matter in quite the same way all right
25:26it's more like oh that's kind of a
25:28vendor question um and so when you pull
25:30that sort of stuff together you as I
25:33said you get this kind of chronic
25:34uncertainty I think the deeper point
25:37there is I mean you can't then there's a
25:39sort of a longer term thing which is
25:40well you know how does oculus changes
25:42how do wearables do wearables kind of
25:44pull the small hole smartphone business
25:45inside out does something like magically
25:47which were an investor in changed its
25:49dynamic as well you could kind of apply
25:53a kind of an a priori observation that
25:55you know ecosystem dynamics and once a
25:57wants people of one the next stage has
26:01to be some fundamental transition it has
26:03to be like a new interface technology or
26:04something and so for example people
26:09trying to do new smartphone operating
26:10systems now remind me quite a lot of be
26:13or next that is to say yeah I've got a
26:17BCD somewhere it was a great footer it
26:20was not actually going to work and next
26:22again in hindsight it was just that was
26:24just not going to work it was just the
26:26wrong time to try and do a new PC
26:28and you know it was just sort of luck
26:31obviously that Apple ended up kind of
26:33needing next and so but that will you
26:34know that was at the game plan the game
26:35plan was not yea bought by Apple the
26:37game plan was quitting your platform and
26:38it was too late and I think the same
26:40thing applies to Firefox OS or Jolla or
26:43even forgotten what the Samsung one is
26:45even called Tizen Tizen exactly it's not
26:48gonna work that's not the where the
26:49change comes from the change maker the
26:51change either comes from world waters
26:53and or even mean or it may come from
26:56some fundamental shift in the
26:57interaction technology either new
27:00hardware which is you know what
27:01multi-touch did for the earthing
27:03potentially some sort of fundamental
27:06long-term shift away from apps to web
27:08which would change the way the operating
27:10system and AMEX works I think that's a
27:11bit less likely but we although other
27:13than that were kind of we're set it's
27:15just we don't know what the victors can
27:17look like what a famous kind of
27:19historical historians quite that you
27:21know history teaches there's nothing
27:22except for something that's gonna happen
27:23and I'm kind of again I'm sort of
27:26exhaust rated by people who think that
27:27looking at windows versus Mac tells you
27:28something about this because both the
27:31iPhone business is in a fundamentally
27:32different position in the industry to
27:34where the Mac what position it was but
27:35also Android is in a fundamentally
27:37different position to where Windows
27:38horse as well and try to compare these
27:40things it's just doesn't really doesn't
27:41tell you anything very useful well one
27:43thing that's gonna happen and this is
27:44one of the points that you've made in in
27:46several different ways is that scale is
27:49going to be an engine of this change and
27:52describe that for us yeah
27:54so back in 95 there were about 250
27:58million pcs on earth and Apple had
28:01probably low double-digit I don't
28:03actually know what the number was but
28:04they've got 80 million Mac's now so they
28:07didn't have very many Mac's back then
28:08and but there were 250 million pcs on
28:13earth in total so this is basically
28:14before the internet took off now they're
28:17about 1.6 billion pcs and 80 million
28:19Mac's and Polly the same again number of
28:20Linux so what's its billion includes
28:23Macs um and there's 2 billion
28:25smartphones tubulin iOS and Android
28:27phones and of which about pretty 400 4
28:30or 500 or iPhones and will Gate a 4
28:33billion is about three and a half to
28:36four billion people on earth today who
28:38have a mobile phone there's a lot more
28:39SIM cards but the Tsarina have to fork
28:40it in people on earth today you
28:42a mobile phone and that will grow to
28:43about four and a half of which about
28:45four get smartphones maybe you bit more
28:47bit less and the variables areas who has
28:49a portable data plan rather than and
28:51you'll get a lot of kind of gray areas
28:54around the edges that you've got a
28:55smartphone but you don't have a data
28:56connection or something so it'll be four
28:58billion smartphones and that encompasses
28:59everything from people in America buying
29:01an $800 phone every year to farmers in
29:04Burma who built their house themselves
29:06out of reeds and mud who have a third
29:09hand $50 Android phone from China with
29:13no name on it right that's running a
29:14through your version of the operating
29:15system and they never connect to
29:17cellular data but they go to Wi-Fi once
29:19a week when they go into town
29:20and that's all those all be smart fair
29:22customers which is among other things
29:24points to the fallacy of looking at unit
29:26market share on a global basis and
29:27thinking this tells you something about
29:28you know what you should be developing
29:30for these people but so yes so you get
29:35we get as it might be four billion
29:37smartphones on earth but then you have
29:39to multiply those because they are
29:41mobile they're not stuck in an office or
29:44in a room somewhere and they're personal
29:46they're not shared with your family or
29:47your colleagues or something and they
29:49have all of these sensors on them and
29:50they have built-in payment and they have
29:51a camera and location and they were an
29:53order of magnitude easier to use and
29:55they're fundamentally there in your
29:56pocket all the time and so the actual
29:59opportunity isn't just that there's two
30:01or three or four times more devices it's
30:03more like a kind of 10 times increase in
30:05the opportunity set and that's one of
30:08the reasons that everyone in Silicon
30:09Valley is so excited all over excited
30:11about mobile sometimes because you think
30:12well hang on a second we're going to a
30:15much much bigger group of people one of
30:20the things that I think is I always kind
30:22of I keep kind of pushing away new
30:23analogies or new ways of explaining this
30:25is that we're connecting everybody for
30:29the first time and it's hard quite to
30:32express what you mean when you say
30:33everybody you know one of the charts in
30:36the presentation and I've been giving it
30:37shows the number of people who are not
30:39connected and so we all see these charts
30:42that go up into the right but the
30:43problem with those charts is they don't
30:45really show you what the talk is what's
30:48actually happening is there are five
30:50billion adults on earth
30:51and four to four and a half billion of
30:53them will be online and basically the
30:56only people who are not online are the
30:58people who are not economically active
31:00or who are basically being shot at
31:03you know people who are really really at
31:05the margins of society but even you know
31:08even in Kenya or South Africa or mine
31:11Mar or you know impoverished parts of
31:14India or Indonesia and so on huge
31:17numbers of people have mobile phones
31:18even in sub-saharan Africa 70% of the
31:21population is under cellular coverage
31:22and most of that will get 3G in the next
31:24five years and forty percent of the
31:26population of sub-saharan Africa has a
31:27cellular phone today so there was this
31:29whole argument I mean I kind of again
31:31people kind of criticized me for being a
31:33kind of Silicon Valley utopian visionary
31:35which I know the the GPS here would find
31:38hysterically funny because I'm generally
31:39the guy but outside the valley I can't
31:44show kind of a utopian visionary because
31:46I say things like well everyone's gonna
31:47have one of these things but what people
31:49almost don't realize is we actually the
31:51mobile industry has that argument ten
31:52years ago you know ten years ago people
31:54were saying well you know nobody in
31:55India is ever going to get a phone or
31:56you know Moni like 1% of the population
31:58will get a phone no one in Kenya said
31:59we're gonna have a mobile phone you know
32:01there'll be five people in oh maybe you
32:02have a mobile phone and that'll be it in
32:03two hands that no no no no no everybody
32:05is gonna have one of these things and
32:06actually the poor you get the more
32:08valuable they are if you are a you know
32:12a man if you're a bricklayer in a
32:14third-tier Indiana city you're $10 nokia
32:17has doubled your income because you find
32:19out where the jobs are right you know
32:21where the workers you know where the
32:22work it's or if you're a fisherman your
32:23farm or anything else and again these
32:25sound like kind of silly utopian ideas
32:26and yeah ten years ago people were
32:28claiming they were well we had that
32:29argument they know what they've all got
32:30phones now and they all decided actually
32:31yeah do you need to stop that stop
32:33smoking cigarettes or you know buy less
32:36clothes or walk to work instead of
32:37taking the bus to get a phone and that's
32:39now what's happening with smartphones in
32:40it's happening what's happening with the
32:41internet and that I think is the sort of
32:43the scale driver that sits across all of
32:46this we're just the PC industry is so
32:50much smaller than the mobile industry
32:52ever was and the PC internet is so much
32:55smaller than the mobile internet what
32:56I'm fascinated by and and you know we've
32:58like you said Apple inand
33:01Google got what they want but what we
33:02will start to see is all these things
33:05built on top of all that connectivity
33:06all this scale and things that you know
33:08may not be great businesses for Apple or
33:10Google or Amazon or Facebook but they
33:12sure are gonna be great businesses for
33:14somebody I think that's right I mean the
33:16the other thing that strikes me when you
33:18look at that kind of global scale
33:19is that if you think back to the PC
33:21business it was basically the USA and a
33:23couple of other developed markets and so
33:25the PC market would sir market you made
33:28a piece of software and yeah maybe you
33:30had to open a sales office in London or
33:32Tokyo or something but basically there
33:33was one market and the dynamics were
33:35kind of the same in the market of course
33:37all of them and so the network effects
33:38and the ecosystem effects inside with
33:39the same of course everywhere today if
33:42you ask target or Chase Manhattan are
33:47you gonna stop doing an iPhone app
33:48because Apple has only 20% share of the
33:53smartphone market and Android has got
33:5480% share what you're actually saying is
33:5845% of your users have got iPhones and
34:01probably 2/3 as of value your users have
34:04got iPhones but there's 500 million
34:06Android users in China and they say so
34:10what and then turn that the other way
34:12around if you're an entrepreneur in
34:13Jakarta or Mumbai there's a very very
34:17small number of very rich people in your
34:19country who have iPhones but all the
34:21middle cars have got Adwords exactly and
34:22so you don't care at all what people are
34:25doing in San Francisco or Tokyo and so
34:29you start getting you know specific or
34:31local ecosystems in much the same way
34:34that you get in any kind of mature
34:35global industry it's almost like
34:37no-one's here now suggesting it's a
34:39little bit like retail which I like a
34:40terrible analogy but you know again like
34:41if you're running a supermarket in
34:43Germany you're not scared of Walmart
34:50if you're running a supermarket in you
34:52know in Brazil or in Indonesia or in
34:54whatever yeah you don't care very much
34:57about what Tesco is doing or what Best
34:59Buy is doing you know you might read
35:00about it I mean The Economist but other
35:02than that you actually have your own
35:04market and yes it's an imperfect analogy
35:06because an Internet company can sort of
35:07theoretically you can compete anywhere
35:09but in practice you actually you can't
35:11really right you've kind of got to be
35:12local and so you spar
35:14the maturing of the tech industry is
35:16that you actually go from saying well
35:19you know there's this many people using
35:21Facebook there's this many people using
35:22iPhone so that's what we go for so you
35:24what's your target market who's your
35:26target market is not the global market
35:28share in your your target market is
35:30people in Spain right right it's gonna
35:32be fascinating and we will dig into
35:35these questions more at a future date
35:37so Benedict thank you so much thank you
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