00:00welcome to the a 16z podcast I'm Michael
00:02Copeland technology is a progression of
00:05new ideas and new platforms gobbling up
00:07the one that came before and the world
00:09of computers we went from mainframes to
00:12many computers to pcs and then came the
00:15mobile phone which in the form of the
00:17smartphone has dwarfed them all but what
00:20does that to mobile when you have
00:23already gotten to everybody on earth
00:25what comes along next that is 10x the
00:28size a 16 ZZZ Benedict Evans and Steven
00:32Sinofsky offer their thoughts on where
00:34technology is today and what comes after
00:37the smartphone on this segment of the a
00:3916 Z podcast Steven Benedict welcome
00:43hello hello let's talk about the
00:46reception of two devices that recently
00:48launched and and what that says about
00:49how technology works and how technology
00:51changes first there was i phone success
00:55and there was this sense you know poor
00:58Apple everyone's so excited and
01:00expecting so much and then in the case
01:02of the success there was this sort of
01:04sentiment oh the beauty is all on the
01:07inside isn't that sort of boring and
01:09then on the flip side Microsoft launched
01:13its latest surface and the tech
01:16community broadly kind of applauded it
01:19for moving technology forward like how
01:21great look at the innovation things are
01:24moving forward in a way that gets us all
01:26excited there's the magic so looking at
01:29these two devices what does that say
01:30about where we are in technology and
01:33where we're headed um well it's kind of
01:37an interesting contrast here that you've
01:39got the sort of the feeling you have in
01:42mobile right now is we're kind of at the
01:43end of one wave and we haven't got
01:44another wave coming up yet so we've kind
01:47of had the smartphone Wars and Apple and
01:48Google both kind of won and we've had
01:50the messaging Wars and you know Facebook
01:52of whatsapp and Instagram and so on
01:53happened and there isn't some new thing
01:55and you look at the new flagship phones
01:56from Apple or Samsung or Jeremy or what
01:59have you and it kind of looked like kind
02:01of like the last year's phones and so
02:03that feels like we're kind of on a
02:04flattening part of the S curve and then
02:06you look at you know the iPad pro or the
02:10surface or Chromebook and what-have-you
02:12and it feels like there's a lot of
02:13stuff kind of changing here and it's a
02:15while this is a completely new way of
02:16doing things and except of course for
02:18you know laptops which are probably not
02:20a terribly new concept so you've got
02:22these kind of interesting contrasts
02:24between where the innovation sits and
02:26how you should think about well where is
02:27which bit of these which of these sit
02:29and which part of the curve and the way
02:32I suppose where I tend to think about
02:33this is there's a the things tend to
02:37look best and they tend to look most
02:39refined and they tend to have all the
02:40really coolest stuff just before they
02:42were about to be completely obsolete and
02:44so you get absolutely the best sailing
02:47ships at the end of the 19th century and
02:49you know the best battleships are built
02:51in 1945 and absolutely that the the best
02:55ever spy planes are built just before
02:57satellites come in and makes biplanes
02:58kind of pointless or you know one kind
03:01of spy plane pointless if you spy planes
03:03they don't have any socks on them become
03:04rice that's circled endlessly for hours
03:06and hours and eventually get shot down
03:07yeah exactly and so it looks like ok now
03:11finally this thing is perfect so you
03:13look at the surface pro and you think ok
03:16at last the PC has been perfected it's
03:18got everything you could possibly want
03:20this as it is one and then you the in
03:23contrast kind of you look at the
03:25smartphone and you think yeah this is
03:27kind of boring nothing much new is
03:28happening here and you could kind of
03:31look at it the other way around I think
03:33that what's happening in the kind of the
03:36PC world is it's being perfected because
03:37it's kind of over right yeah let's be
03:39clear you're calling the end of the PC
03:41world yeah and in contrast the
03:43smartphone world is kind of only just
03:45going and that what's happening is like
03:47we've built the platform and now you get
03:49this explosion of innovation on top of
03:51that platform I think that's that for me
03:53that's the definitely the most the most
03:56key thing that's really going on is that
03:57people have to internalize like we're
04:00how platforms innovate and diffuse and
04:02how where they go from from one stage to
04:06another and so what what's happening in
04:08mobile is the the underpinnings have
04:10started to started to solidify and I
04:12wouldn't say boring but I think that
04:14they've become like predictable in the
04:17sense that you're going to get more
04:18capabilities more sensors better battery
04:20life you know more interesting thinner
04:23smarter devices and things and they will
04:25get better and we will someday reach
04:26this point where there's no
04:27you could perfect that particular you
04:29know six inch form factor or something
04:31like that but what's really happening
04:34now is is the innovation has just moved
04:36up the the stack and now you're just
04:39gonna start to see like constellations
04:41of innovation Benedict mentioned
04:43messaging and that was certainly one
04:45where there were dozens and dozens of
04:47companies and new ones all the time but
04:49now there's a center of gravity that's
04:51that's very substantial but at playing
04:53it forward you know it's not like
04:54banking has been settled it's not like
04:56entertainments been settled it's
04:57certainly not like productivity has been
04:59settled but the activity is massive
05:02building on on the stability in fact
05:04that one of the maturing stages of the
05:06PC was when the web came along and
05:08started being innovative across all the
05:11PCs I see I wrote a piece the other day
05:13called sort of the smartphone it's not a
05:15neutral platform saying that you know
05:17unlike say a web browsers are on either
05:20Windows or Mac where the web browser was
05:22the platform and the window windows or
05:24the mat computer wasn't really where you
05:25were building Internet services whereas
05:27on a smartphone not only you building
05:28him in the web browser and inside apps
05:30but you got all this other stuff going
05:32on that Apple and Google are building
05:33integrated services deep integrating
05:35services deeply into it so you've got
05:37all this innovation happening in how
05:39you're going to use the device but the
05:41device itself is kind of set like now we
05:42know okay it's roughly this size it's
05:44got these capabilities the performance
05:46has grown to the point that you can do
05:47all these things you wanted to do three
05:49years ago four years ago but can't do in
05:51the battery life in the location and so
05:53on it's all there so you've got this
05:54kind of Cambrian explosion of innovation
05:56on top of the smartphone now that that's
05:58become like a relatively solid platform
06:00where you kind of know what you're
06:01dealing with and all these things that
06:03become possible does that then shift the
06:05center of power or the centers of
06:07gravity I mean away from away from Apple
06:09and or handset manufacturers in general
06:11well I think I think there's a kind of a
06:12fundamental change going on here which
06:14is there are something like 300 325
06:17million PC sold a year and there's about
06:20one and a half billion pcs on earth and
06:21there are about one and a half there
06:24about two billion mobile phone sold
06:26every year and almost all of those will
06:27become smartphones in the next couple of
06:29years well over a billion are now and so
06:31we'll go to 2 billion smartphones if you
06:33add in tablets maybe two and a half as
06:36opposed to 300 million pcs and we'll go
06:38to five to six billion
06:40of those in youth in any given time
06:42around the world although you know in
06:43youth depends on how much money you've
06:45got where you are and so on and so you
06:47get to this ecosystem that's just an
06:48order of magnitude bigger and of course
06:51that's happened before so you went from
06:52mainframes to many computers and you
06:53went from many computers to workstations
06:55and workstations to pcs yeah it's
06:57actually let me just put some numbers so
06:58that I can understand like what we're
07:00really talking about like the mainframe
07:01world the whole world of mainframes was
07:04probably less than a hundred thousand
07:05mainframe computers actually kind of
07:07interesting stat was that they didn't
07:09use it to measure mainframes in terms of
07:11like actual boxes they they measured
07:13them in the MIPS delivered and so IBM
07:16used to be measured like how many MIPS
07:18are actually in use at any given time
07:20and so at the height of of MIT
07:23utilization there were about 11 point 1
07:26million MIPS like active like in on the
07:29books which is roughly 200 Mac books
07:36you know there were about like at the
07:38height of word processors so this is
07:40before there were like software word
07:42processors there were these things you
07:44would buy for typists in an organization
07:46that were dedicated they were from
07:47companies like long or Sperry or things
07:49like that there were maybe 500,000 to a
07:51million of those in total and most of
07:53them in the government like it was sort
07:55of like a 1984 image and then you know
07:58the mini computer so there were there
08:00were maybe just over a million digital
08:03equipment mini computers to benedict's
08:05earlier point if you were using a
08:07digital equipment VAX computer in like
08:101988 89 they came out with the new the
08:13last version of VMs software and it was
08:15the most amazing thing you've ever seen
08:17they had you whatever programming
08:19language you wanted to support they had
08:21full support across the platform they
08:23had distributed systems they had the
08:25best shell they had like the best tape
08:27drives and disk drives and peripherals
08:30it was and it was all it fit together
08:32there was this beautiful poster I used
08:33to have in my office of all of the parts
08:35and then nobody bought it like in fact
08:37they just they evaporated like saying
08:39Lea overnight cuz it was over the PC had
08:41already showed up there were about 5 to
08:446 million Apple two's that ever got sold
08:48but here's interests when there were
08:49about 17 million Commodore 64's why is
08:52that because it broke in
08:54the sort of the Dan in the living room
08:57not just like the garage on the office
08:59and then been as it gave the PC numbers
09:01maybe that you know now we're at a 1.5
09:04billion installed base what was the
09:05number for how many have ever been sold
09:07I think you uh about four and a half
09:09billion Murray ever you know and then
09:12the smartphone the numbers and so the
09:14interesting thing is for each of those
09:16they they they didn't sell like the
09:19first people to buy minis weren't the
09:22people who bought all the mainframes
09:23they were all the people who didn't buy
09:24the mainframe and for the people who
09:27bought like the PCs they weren't all the
09:29people who bought everything that came
09:31before in fact the first ones I I had a
09:33job I was to go and give them to the
09:35people who didn't have word processors
09:36like I I carted them around and they
09:38were happy to get them I'm sure
09:40well you had word prices has said well I
09:42have to use this to get my job done and
09:44I'm not using that that's a toy right so
09:46what you're talking about though is this
09:47this phase then after the phone and
09:50that's what you're starting to imagine
09:51well I think what what what like we were
09:54sort of pondering was like what do you
09:56do to sell the next thing because
10:00everybody's got where's the market
10:02that's more than the phone because what
10:05caused justice Stevens point about you
10:06know who it was that you sold to you
10:08didn't create the PC industry by
10:10converting mainframe customers you could
10:12you you created that by building this
10:13new industry that was a hundred times
10:15bigger and that left mainframes and
10:16minivan workstations just completely
10:18marooned and that is now what is really
10:22what's happening with mobile it's that
10:23first of all mobile becomes much bigger
10:25than PC but PC continues in parallel
10:27then PC leaves mobile leave PC marooned
10:30and maroon when PC will kind of start to
10:32shrink away a much smaller base over
10:35time but what what does that to mobile
10:37what comes along that's 10x bigger than
10:39mobile that is your next generation will
10:41change when you've already got to
10:43everybody on earth so there isn't
10:44another generational change of that kind
10:46it has to work into some other way do
10:48you think that that has to happen I mean
10:51given the history of Technology and how
10:53we do things is there going to be
10:56another thing that wouldn't be 10x
10:58bigger than the phone well of course the
11:00one of the things that's going to be
11:01interesting is all of the software that
11:03gets written on top of these and so that
11:05itself is it already is ten maybe
11:07that's the thing that's right and so
11:08what I what for me what's so fascinating
11:10is is that don't think about the the the
11:13platform shift and the revolution we
11:15tend to manifest it in terms of the the
11:17physical device and we think about it as
11:19the shape or the size which leads to all
11:21the confusion over tablet or this or
11:23that and like Benedict loves to point
11:26out like the huge shift and the supply
11:28chain that's really going on so one of
11:30the things is like IOT is gonna be
11:33there are definitely going to be more of
11:35these devices right that are IOT but how
11:38are those gonna get built on what
11:39ecosystem and how are they gonna they're
11:42mostly they're going to be small phone
11:43components so not when you get down to
11:45you know the 10 cent device or the the 5
11:48cent sensor and what-have-you but an
11:49awful lot of this stuff is it's actually
11:51smartphone component so most obviously
11:53like a thermostat or drone all of those
11:54kinds of things are basically just smart
11:56phone with smart phones with wings and
11:58how is it gonna get online when you're
11:59in your home how are you going to
12:01control this stuff or so we're gonna
12:02keep you connected up to is kind of
12:04going to be connected up into the
12:05smartphone ecosystem so it's it's not
12:07immediately obvious that IOT creates
12:10this whole separate ecosystem that you
12:11can use to create new bigger companies
12:14that come in and crush Apple and Google
12:15and in you know Samsung an almond
12:17Qualcomm and so on it feels like those
12:19are kind of extensions of this business
12:21rather than you know the next generation
12:23that's much bigger you can imagine in
12:25the IOT future that instead of you know
12:271 or 2 phones per person it's 10 things
12:30per person or 20 things or hundreds
12:32right you won't even you won't even know
12:35and we won't count how many even how
12:37many screens we have but I would
12:40definitely say that the that the
12:43stitching of the other it's definitely
12:44gonna happen via the cloud there's gonna
12:46be a notion of identity there's gonna be
12:49shared experience and coding because
12:50there's only so many operating systems
12:52people are gonna do things for but but
12:55also like you're you're they're not all
12:56gonna be self-contained
12:58like you your light bulb is 15
13:01ecosystems in your home right 15 gateway
13:03devices you're gonna have like maybe
13:04three and a bunch of overlapping Venn
13:06diagrams but yeah the light bulb is
13:08gonna talk to the phone or the
13:09thermostat or something and your light
13:12bulbs not gonna have a screen that I
13:13program it on either not only that
13:15you're not and you're not even gonna
13:16like by this light bulb kit that comes
13:20BIRT screen that they all connect to
13:22which is kind of where we are right now
13:23right now you're in a kit mode you go by
13:26a door lock and like it might have an
13:28app but it's likely to connect to a
13:29special hub that that door lock uses
13:31yeah door opener came with like its own
13:33router hub thing yeah it's like your
13:36home has got AC and DC and you've got
13:38110 volt and 240 volt and 5 volt in
13:41different bits of your home for
13:42different stuff and you need different
13:43plugs why she in America you do you have
13:45different place but but but I think what
13:48what really people are also under
13:50estimating is just the and why we're so
13:52so bullish on the the the growth the
13:55opportunities are just the the
13:57opportunity to build whole new
13:58ecosystems on top of all of this back
14:01back when the PC was taking hold the
14:03debate was over operating systems and
14:05then graphical interfaces and you know
14:07people underestimated the impact of just
14:10having office on on PCs which created a
14:12whole almost a separate a whole separate
14:14layer in the whole ecosystem that was
14:16equal in size to the operating system
14:18the same thing happens on on mainframes
14:20like the mainframes were interesting but
14:22really look at Oracle and the databases
14:24that got created and then look at what's
14:26Oracle got created you look at the SI PS
14:28of the world and then what happened in
14:30the web is the same thing like you end
14:32up with these whole new companies built
14:34on top of that infrastructure which
14:36often dwarfed the infrastructure and I I
14:38think that the the IOT space is going to
14:41but it's gonna not necessarily be like a
14:44whole new one like a whole new thing
14:46it's just gonna be built on top of this
14:48framework which is gonna be very
14:49empowering for that whole ecosystem
14:51starting all the way at the people who
14:53make arm chips all the way through the
14:54supply chain through the phones and
14:56those companies are gonna be in the
14:57position to drive the kind of software
15:00support that people have and create it
15:01and as Benedict was pointing out it the
15:03the services that you use are going to
15:05be sort of integral to the whole
15:06experience because if you make like
15:09garage door openers or lightbulbs or
15:10control things you're you're not there's
15:13a lot of stuff you're not gonna know how
15:14to do and so relying on that is gonna be
15:17super well I think there's a kind of a
15:18thread that runs through this which is
15:19this sense of the ecosystem that you
15:21know in the 80s or 90s if you wanted to
15:22put computer into something you used PC
15:25you know if you had an ATM or you know a
15:28kiosk or a piece of machine tool or
15:30something it would be running a PC in
15:32like the three million ATMs on us or one
15:35run Windows XP until quite recently and
15:38today you wouldn't do that today you'd
15:39use mobile components instead of Intel
15:41components and you would use smart phone
15:43a smartphone operating system so you'd
15:45use Android or you know if it's an apple
15:47in the Apple ecosystem it will be
15:48connected into iOS and that whole
15:50ecosystem it just becomes much bigger
15:52and just leaves swamps the other
15:54ecosystem in terms of where all the
15:55innovation and all the scale effects can
15:56be so just you know sort of kind of an
15:58unfair but relevant comparison you know
16:00the Wintel ecosystem now as a percentage
16:04of total computing so including tablets
16:06and smartphones and everything else is
16:07now sort of 15 percent of unit sales and
16:10it's going to go down it's going to go
16:12maybe not 10 percent but you know it may
16:13go down to 10 percent and that's kind of
16:16where Power PC and Mac OS were in the
16:18early 90s and you get the same kind of
16:21effect of you know people making a
16:23decision about where they're going to
16:24put their investment and you know where
16:25all the innovation is going to get get
16:27centered it's all going to get centered
16:28into that new ecosystem and so back to
16:30the thing I was saying at the beginning
16:32about you know look at the surface pro
16:33or the MacBook or the so you look at the
16:37surface pro and you put the iPad pro and
16:39you put the MacBook the new Apple
16:41MacBook next to it and you put like an
16:43iPhone 6s and you put like a Lumia next
16:45to it and of course because it'll mean
16:47that I mention alumnos because you can
16:48plug a screen and a keyboard and a mouse
16:50into and it's running Windows 10 so
16:51theoretically that's in practice that
16:53he's actually a PC right and so it's
16:55like a Lumia is almost like a Mac Mini
16:57with a screen you know it's basically
16:58the same classic right with a screen and
17:01a battery so you look at all these
17:03things and you you get these industry
17:05and analysis firms okay well that's a
17:06tablet and that's not a tablet that's a
17:08PC with a removable keyboard and you
17:11know that's a smartphone with a
17:12removable keyboard and it's like you can
17:15put all these definitions together but
17:17the actually the only distinction that's
17:19meaningful between them is well which of
17:21these are based on the future in which
17:23of these are based on the past or which
17:24ecosystem or which ecosystem are they on
17:26are on they on the ecosystem that has
17:28all of the scale at all of the growth
17:30and where all the innovation is going to
17:32be focused whether that's are the chips
17:33or the software or everything else or
17:35are they on the ecosystem that really
17:37kind of doesn't have that anymore and
17:39it's kind of you're left behind which is
17:41you know to my point about you know you
17:42know the best ever sailing ships being
17:44produced at the end of the 19th
17:45you know that's kind of where something
17:49like a surface pro is next to the iPad
17:51pro in that you know the first sailing
17:53ship the first steam ships needed masts
17:55and there had been kept breaking down
17:56and you know people weren't quite sure
17:57how to build them and they kept sinking
17:59and so on but that was kind of the on
18:00the upward curve and the sailing ships
18:02on the other hand were much better and
18:04much faster for about you know for a
18:06little bit longer but they were on the
18:08flat part of the curve and I think this
18:09is kind of where the whole like x86 when
18:12is architecture is me that whole
18:14environment it's like it's perfect but
18:16that's but it's rigid this way like you
18:20you're you're just an innovative
18:22electrical engineer or mechanical
18:23engineer and you develop a way to sense
18:25something in the environment so it
18:27doesn't matter what it is but you need
18:29the rest of the compute platform to do
18:31something are you gonna go and pitch it
18:33like which chip manufacturer do you want
18:35your sensor to be tightly integrated in
18:37like it's not just a unit sales it's the
18:39chip manufacturer that has the health to
18:41absorb it at the software level the
18:43firmware level the integration level and
18:45this is the embedded mention the PowerPC
18:47and this is basically what happened to
18:49Apple it's like it was just too small to
18:52support the innovation at the scale
18:54needed to compete with what was going on
18:56at Intel and like there just weren't
18:58enough electrical engineers designing
19:00chips to be competitive so let's be
19:03clear on this then let's set aside the
19:05platform of the past and the perfection
19:07of the you know the PC has arrived and
19:09therefore its its end but the platform
19:11of the future what what are the who are
19:15the players and the components that make
19:17that up and then where do you start ups
19:19then best fit into that platform of the
19:21future well there's a stack and it
19:22depends which part of the stack you want
19:24to think about say you work up from the
19:25bottom with arm and then all the
19:27licensees around arm and the people who
19:29make chips for arm and then you have
19:32Qualcomm and spread from and mediatek
19:34who are packaging that up so that people
19:36you don't know anything about cellular
19:38technology or semiconductor design can
19:40still create create phones and then you
19:42have the whole Shenzhen ecosystem and
19:44it's quite unclear how that's gonna play
19:47out and whether there will be kind of
19:48equivalents of Dell HP Compaq and so on
19:51who kind of become the kind of the
19:52global scale players or not you know
19:54what the end of future of Android is
19:56but then you have a kind of the software
19:58ecosystem on top which is Android and
20:00iOS and you know in Contra distinction
20:02to what we were just saying about scale
20:05the Apple ecosystem has 700 750 million
20:08active devices at the moment and it has
20:10two thirds of App Store revenue and it
20:12has roughly half of web traffic so it
20:13has sufficient scale to attract develop
20:16which is the first time that we have to
20:17it's the first time we have to we to to
20:19to winners you know and then you have so
20:22you have the Apple ecosystem in the
20:23Android ecosystem next to each other and
20:24they've created this platform and then
20:27you have as you go further up the stack
20:28you have then Google creating discovery
20:31and Facebook creating social and
20:33discovery and all sorts of other people
20:35trying to create other kind of ways of
20:36value on top of those and I think and I
20:39think for certainly at the at the start
20:40of space and particularly for for
20:42enterprise computing or business
20:43computing which is sort of a very
20:45understandable innovation space you know
20:49there's you news people actually buy
20:51things they buy and you you know you you
20:52there doesn't appear to be like a magic
20:55step of like go to 100 billion user kind
20:57of thing you know you you've you've got
20:59like all of this innovation that you
21:01have to do to solve all these business
21:03processes and business innovation
21:04challenges on top of this infrastructure
21:07whether it's AWS or it's a sure or it's
21:09Google cloud they all provide this
21:11fundamental scale that you can't do on
21:14your own but that's just going to able a
21:16whole bunch of innovation we're having
21:18these two stable points of iOS and
21:20Android like are super helpful to allow
21:23this to happen and that is exactly what
21:25happened in the PC era like once Windows
21:27and and Intel sort of stabilized that
21:30itself enabled the web to continue to
21:32exist because it gave you know targets
21:34for the browser targets for graphics
21:36drivers and video and all of that to
21:38happen and so we're at this sort of
21:40golden age where now if you start a
21:41company that the level of uncertainty
21:43about like even where to begin is much
21:45lower than it was even a year ago
21:47you have this massive thing to plug into
21:49if you if you if you can and if you
21:51build the right thing that thing is not
21:53likely to be a PC perfect though it may
21:56be and a battleship in benedict's
21:58parlance but it'll be that thing that
22:02comes after the smartphone and I and I
22:03have to say I'm really excited to see
22:06how this plays out and what can possibly
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