00:00hi and welcome to the a 16z podcast in
00:02this hallway conversation episode
00:04Benedict Evans and Steven Sinofsky
00:05discuss Apple's September 2018 keynote
00:08event and share their thoughts on the
00:10new innovations and lessons that stick
00:12out what are the changes that really
00:13matter and where are we now with
00:15something that's gone from being a toy
00:17to a phone to fashion statement and has
00:19now pivoted to a health monitor that can
00:22how closely aligned is health to the
00:24overall value proposition of Apple and
00:26what are some of the characteristics of
00:28how Apple innovates as a company as a
00:30whole from components and building
00:31blocks to how it all comes together so
00:34I'm Steven Sinofsky I'm Benedict Evans
00:36so yesterday was a pretty exciting day
00:38in the world of Apple in the sense that
00:42there was an event and a lot of people
00:44showed up at the Steve Jobs theater and
00:45a surprise surprise had some new phones
00:48for us to talk about yes I'm thinking
00:50about translating Californian pretty
00:52exciting into English would be which
00:54would be okay it was kind of okay and
00:55that is English where all the words are
00:57spelled wrong like defense and the Apple
01:00every Apple event is we're all
01:01tremendously excited we're super excited
01:03super excited yes I forgot it sorry
01:05right well so I the way I kind of think
01:07about this is we're now kind of on the
01:09upper slopes of the s-curve for
01:10smartphones there was a period when like
01:12the first smartphones were amazing and
01:14then there's a period of very very rapid
01:15improvement the screens get better they
01:16providers get amazing every year or
01:19every other year you think oh my god
01:21this is so much better than what I've
01:22got now um I think we're now kind of at
01:25the point where most of their those easy
01:26wins are done I'm the iPhone X was
01:29apples implementation of the edge to
01:31edge screen okay this is kind of a big
01:32decent deal the iPhone X s I still can't
01:37say that without smiling
01:41would not make fun of product naming in
01:44this podcast so yeah that was our joke
01:46we're done we're on the upper slopes of
01:48the s-curve and we're looking at
01:49incremental improvements of an existing
01:51product and I thought it was kind of
01:53interesting to think about well how do
01:55you manage that segmentation and those
01:56channels and the differentiation and how
01:59do you think about that when you don't
02:00have like an amazing bomb to set off in
02:02the auditorium but it is you know I
02:04always have a little bit be mostly
02:07because of our difference in background
02:08but like I tend to really have a very
02:11incremental innovation is BIGBANG
02:13innovation it's it's not it's just
02:15because people really underestimate just
02:18how phenomenally hard it is to pull
02:21together a plan to execute on the plan
02:22and to get it done and and really going
02:25is difficult boring is insanely
02:27difficult to to coin a phrase on purpose
02:30that I used it that way and what what
02:32Apple is doing is like they are at
02:36absolute peak execution of what they're
02:39doing that the scale they're doing it at
02:41the quality that they're doing it and at
02:43the changes each iteration that that
02:46they're doing and what's fascinating
02:47like I don't understand why Wall Street
02:50doesn't understand this what they're
02:51doing is late stage s-curve development
02:54better than any other company has ever
02:56done it and and at the scale and so
02:59there's what they did was not like oh my
03:01god I have to run out and get a tour
03:02even though of course I will do that and
03:04many of people listening to this will do
03:06that because there were some very very
03:09interesting interesting things in that
03:11like in particular for me like a new
03:13camera is super interesting and again
03:15just the way they innovate it's not just
03:17a new camera it's a new camera with a
03:18new software experience with new
03:21hardware that they custom design are
03:22brought together but on the other hand
03:24like the most interesting things that
03:27they're doing are kind of to say it
03:29crassly about making money yes well
03:32there's a kind of desi there's on the
03:35one hand there's the reliability of
03:36every year delivering the phone with X
03:39fast chips with X improvement in battery
03:42life and just kind of continuing that
03:44iteration of the phones just get better
03:45every year that's sort of where Detroit
03:47is now the cars keep coming they keep
03:49arriving on schedule they keep not
03:51breaking down and that's hard
03:52yeah and that's sort of what Apple's
03:54doing with the iPhone the phones keep
03:55coming they keep getting better and more
03:57liable and they keep not breaking and
03:58they keep shipping on time yeah it's
04:00just and they ship many many more of
04:03them each time yes it is a big deal that
04:05the other thing that's sort of
04:07fascinating is to look at the pricing
04:08and the kind of the optimization of the
04:10portfolio as we've gone from one phone
04:13that was six hundred and fifty dollars
04:14two hundred dollars after subsidy in the
04:16USB with one six hundred and fifty
04:18dollar phone and then there's no one
04:20weber by zero percent market share yeah
04:22you're channeling Steve that
04:24a guy named Steve a guy named Steve to
04:27then then there's the old fire then they
04:30see the the current phone plus last
04:32year's phone as one hundred two hundred
04:32or two hundred dollars cheaper and then
04:34you've got multiple man and you've got
04:35multiple memory sizes as well and now
04:38we've got two previous year models and
04:42we've got they've dumped last year's
04:44model which I think they only did once
04:46they did with the original and I'm done
04:48a long time they did with five and they
04:50tried the 5c which didn't work now we
04:53have two new iPhone model flagship
04:57iPhones in different sizes say they've
04:58gone back to have multiple sizes then
05:00there's another slightly cheaper one
05:01which uses a different display
05:02technology because the cutting-edge
05:04display technology is too expensive to
05:06do in those kind of volumes as well
05:08they've got six colors and multiple
05:12memory sizes so you kind of can't up all
05:14the skills they're gonna have plus the
05:15skis for different regions plus the
05:17multiple sim thing for China they're
05:18gonna have like 50 skis as opposed to
05:21one ski that's just super important for
05:23people to to really internalize because
05:26it's very easy if you're sitting at the
05:28event and everybody's like oh my god I
05:29can't tell the difference between these
05:30or I want the this feature but I want it
05:33in the $499 phone or whatever which
05:36isn't it which is that one the big size
05:37but I want it in the yellow color right
05:39right and the the thing is is that that
05:41you don't sell hundreds of billions of
05:44dollars worth of anything with one unit
05:46play and people really always get this
05:49confused like that you oh you have to
05:51have so many SKUs because you know my
05:53whole career we used to fight against
05:54having lots of different ways to buy a
05:55word processor but when you're selling
05:57it massive scale you you just you do
06:01have a very complex product line just by
06:03definition and again it's one of these
06:05things that Apple is really mastering
06:06like is executing masterfully and and
06:09yet yesterday I just saw so many
06:11negative comments about this lineup it's
06:13so complicated the thing that there that
06:15happens is you just you never see all of
06:17them at once like when you go into
06:19Walmart there's not gonna be a fifteen
06:20hundred dollar phone staring at you and
06:23I suspect that even when you go into the
06:24Apple store you're not really gonna see
06:26the low-end ones that are you're not
06:28gonna buy them they'll they'll send you
06:30to another channel place and you're not
06:32gonna see ads that like the way you
06:34would see in a Dell PC ad that just
06:36shows all the price points if
06:37fifteen products you know or the HP
06:40Pavilion qr2 core i7 3x I you know all
06:44like and then compare it to the XZ and
06:47the XK and you're supposed to figure
06:48this out they they do this is part of
06:51their execution is to have this
06:53complexity maximize their their revenue
06:56from it but not surface it to the
06:58average consumer who turns out to not
07:01and my favorite indication of not
07:03surfacing it to consumers is like when
07:05you when you're like at a party and
07:07you're talking to somebody and they say
07:08which phone do you have
07:09they just say the big one or the iPhone
07:12they can't they literally can't tell you
07:15which model in fact I I just tried to
07:17send an old phone to a friend and I was
07:19sitting there with a magnifying glass
07:21trying to read the laser etched number
07:23on the back to figure out which one it
07:26was yes they don't care they they know
07:28you don't care you're gonna buy a phone
07:30when you're gonna buy a phone I mean
07:32there's also sort of an optimization
07:35sort of I'm gonna take a point there's
07:37an optimization in here because see the
07:39iPhone 10 and now the iPhone 11 is all
07:43the 10s assess is is OLED yeah and then
07:48but they've not been any the OLED is the
07:50cutting edge screen so they're not been
07:51able to get it down to alert the the
07:53lower price point so they're making in a
07:54sort of a fill-in with an LCD which
07:59actually I think is is again now imagine
08:02this is optimization right it's
08:04optimization but imagine now your your
08:06Android vendor and now where's your
08:09flagship phone compete on price because
08:12this this new LED one in the middle is
08:14actually quite the sandwich problem for
08:17for a Samsung or an LG trying to insert
08:20a phone because if it's bigger than the
08:22X it's bigger and yet choice and yet
08:26cheaper and like so it's actually really
08:28really hard for them to deal with this
08:30yes it is a little bit hard to tell
08:32people which one to buy of course I mean
08:34the camera is see actually the easier
08:35distinction right and and also the
08:37screens will you know screens people you
08:39can't see the difference so if you
08:41actually do see them side by side yes
08:43you'll you'll see the value which then
08:45back to the Android thing it's gonna
08:46force them like I suspect we'll start to
08:49see higher price lower
08:51and phones like being dug out of the
08:53parts bins from the Android vendors in
08:55order to sort of match that channel
08:58approach but the Android vendors face
09:00this problem which is they're competing
09:02with all the other Android vendors at
09:03the same time yeah and which generally
09:05is pulling the price down yeah and they
09:09can't maintain it and so it's it's
09:11fairly complex what's going on here is a
09:13fascinating dynamic which is you have
09:14these range all sort of mid twice
09:16Chinese manufacturers who have kind of a
09:19a semi premium brand and a mid price
09:21about four five hundred three four five
09:23hundred dollars which people quick to
09:25point out I'll have all the same
09:26features as the 10x the point is those
09:28of course what those are doing is
09:29they're killing a high-end Android and
09:31so you've got this sort of mix where
09:34Apple has got as it might be two-thirds
09:36to three-quarters as a high-end space
09:37and then it's as a kind of a ferocious
09:41war for the rest of the market with a
09:43ferocious war with prices dropping and
09:45this is literally the dynamic that why
09:48there are no really really good
09:50expensive pcs because no matter what an
09:53HP or Dell or Lenovo come out with
09:56that's expensive they have to pull it
09:58down the price down in order to gain
10:00market share yeah and I mean while the
10:03people who want an expensive high-end
10:04premium PC might be probably gonna buy
10:06Mac well and and then you get into this
10:08hole oh my god the Mac CPU is old except
10:11that whole ecosystem isn't moving so
10:13it's not really necessary to have the
10:14latest and greatest because there just
10:16hasn't been any advantage yep and and so
10:19it really just points out that as you
10:21mature and the s-curve and the the most
10:23interesting thing as you mature on the
10:24s-curve is that generally what happens
10:26as companies go through massive turmoil
10:28and they changed their executive staff
10:31and they bring in people who are willing
10:32to figure out how to charge your
10:34existing customers more money
10:35yeah and milk the company and yet Apple
10:38is sort of doing this by nature and this
10:40is not new when Steve Jobs was running
10:42ipods this is precisely how I paws ran
10:45yes like the old one would become the
10:47new the new one would come out the old
10:48one would become a cheaper one they're
10:50cheaper to make they're cheaper to
10:52distribute and you just keep going
10:54lather rinse repeat and it's a revenue
10:56Maximizer while you have a
10:58differentiated brand a great channel to
11:01sell things through and customers that
11:03are super loyal which by the way the
11:05first point that Tim made in the
11:06presentation was that they have 98%
11:09satisfaction with their products yep
11:11they're optimizing their I'm more
11:15bullish that I think that this is just
11:17what your what a business does for 90%
11:20of its calendar time in existence I
11:22think there's a there's a sort of I know
11:24no there's a desire for a shiny new
11:26thing and there's not a shiny new thing
11:29with the iPhone and in fact sitting in
11:30the event yesterday it was actually
11:31quite difficult to tell which of the new
11:33event which of the things they were
11:35saying about the iPhone or tennis were
11:36actually newer which of them they were
11:38saying it's previously said about the
11:39previous which is you know like if you
11:41take long term industries like when a
11:42new car comes out every year like yes
11:45they tell you it still gets you from
11:46point A to point B but now better and
11:48you're aware and they always tell you
11:50it's slightly more reliable and it's and
11:52there's a history in it but let's take a
11:54different the fascinating thing I was
11:55gonna say under the hood is a chip team
11:56it's unbelievable yeah I gotta you see
11:59that in the watch as well I'm looking at
12:00my notes from yesterday and I just
12:02started writing down the numbers and
12:04then the slide popped up but this you
12:05know 7 nanometre first it's called the
12:07a12 Bionic which to this day I can't
12:09believe they have the ability to use the
12:10word buy on it because I thought that
12:11was a trademark and that Isaac Asimov
12:14owned it or something I feel it's like a
12:15seventies T V shape well yeah certainly
12:19familiar I'm glad that you got it on
12:20bbc4 but but like seven nanometers you
12:26know it had say it's a six core CPU with
12:28actually two kinds of cores yeah it's
12:30just super interesting four core GPU
12:32this eight core quote neural core which
12:34achieves basically at EPA a TPU or FPGA
12:37or something that none of us know what
12:39it really is six point nine billion
12:41transistors and five trillion of some
12:44sort of operations per second yeah and
12:46you just like there's there's nothing so
12:49fun to find then although just to be
12:50fair to all that everybody's like oh but
12:52what about hawala why Kieran and what
12:54about the latest Snapdragon those are
12:56gonna ship and they have two problems
12:58they're gonna ship after the iPhone
13:00which is gonna be available in like ten
13:01days or whatever and they're gonna be on
13:04Android phones that have no Android
13:06optimized for anything that they do that
13:09they do so you won't even know and
13:11someone will run some synthetic graphics
13:13benchmark and whatever which Apple
13:15doesn't care about at all like that
13:17I'm sure they don't even run them and
13:18and so they like Apple is like the
13:22leading chip maker right now which is so
13:25weird to think about the fun thing was
13:27is what is it four point nine something
13:29how many how many transistors is it now
13:31it's how many transistors six yeah so I
13:35I can't what point nine billion I think
13:36was the number six point nine so I
13:38forget exactly what the number was but a
13:40while ago I went and got the stats for
13:42the render farm the pics are used to
13:44generate the original toys oh right
13:46right right and it's like this many son
13:48works like how many hundreds and
13:49workstations and with how many spark
13:51chips okay well let me look up the specs
13:53for those spark chips and it came out it
13:55as it might be I can't now remember if
13:57it was either one or two trill to one or
13:59two billion transistors yeah like like
14:01Avatar was about 2500 Pentium pcs but
14:05the point is so the entire Pixar render
14:07farm to make Toy Story which does she
14:09doesn't know that high res today but
14:10yeah it amazing but it was as it might
14:12be a third of one new iPhone yeah and
14:16yes it's not comparable and it's
14:17different the transistors are being used
14:18for different things etc cetera right it
14:21gives you a sense of what Moore's law
14:22has done in the last twenty five years
14:23which is that you know there's this
14:24multi-million dollar render farm is now
14:26and iPhone so you know that and I'm just
14:30again wanted just like the camera stuff
14:32people are really gonna notice and
14:33you're gonna start to see these now I
14:34will say like many of other camera
14:36innovations like sort of haven't
14:37appeared very broadly like I've almost
14:39never see a time-lapse you never see you
14:43you never see slo-mo really unless it's
14:45like a kitten jumping or running yes so
14:47some of this stuff I mean I think we
14:48talk about the sort of flattening esker
14:50phones I think that the two places where
14:54you can actually feel the difference of
14:55battery life in camera yeah I think
14:57battery life has now for me got to the
14:59point that it really does last all day
15:01reliably particularly with yet with the
15:03iPhone 10 the kind of it's reached a
15:05point where I never worried about it
15:06running out during the day I mean other
15:08people have different experience but
15:10battery life you you would still notice
15:11if it lasted all day and it wasn't
15:12before yeah the camera is the other
15:14place where you will actually be able to
15:15tell a difference I think the chip speed
15:17it's increasingly difficult to say this
15:19is faster than it was last year and the
15:21one area I think you know they when they
15:23say that they made face ID faster I bet
15:25we'll all notice that yes cuz you use it
15:28and like for all of the things that
15:29people said it's not gonna work
15:30it was actually been like as close to
15:33flawless as you can get yeah and now
15:34it's just gonna be the way that the
15:35thumbprint advanced but I think in
15:38general the camera is the thing cuz the
15:40camera you take a picture in the dark
15:41it's still not perfect right you take a
15:43picture of your kid jumping into the
15:44pool yes Apple and Google and Huawei and
15:47Samsung show you the one where it came
15:48out but there's always like three word
15:49didn't come out right right right so
15:51that stuff I think you will still
15:52continue to see improvement of course
15:53this is the thing that Apple we're
15:54talking about but Google talked about a
15:55lot as well is it it's no longer the
15:57camera module it's everything it's the
15:59GPU and the CPU and the machine learning
16:01yeah and this is this notion of you know
16:05photography is just on this it's
16:07computational computational photography
16:08is just this massive change in what's
16:11going on but I want to just now touch on
16:14what I think that there was just a lot
16:16of innovation and it's also a
16:17fascinating story in the evolution of
16:19the product which is in the watch yes
16:21like when the watch first came out we
16:22both were very excited and very bullish
16:24on it and we spent a lot of energy with
16:27people like sort of saying oh what's the
16:29use case yeah this makes no sense it's
16:32just a gimmick and here we are now like
16:35I mean they just they made something
16:37that is literally life-saving yeah and
16:40that's why would you not buy this few
16:41pounds oh you know and or if you're just
16:44me and you just are a worrywart buy it
16:45for yourself like and but the
16:48interesting thing is to me is first go
16:51back to that original positioning where
16:52people you know so it definitely
16:54iterated on what is it it's not just how
16:56does it work right it's also what is it
16:58for well and and you know people really
17:01just like all this stuff we talk about
17:02I'm like everybody's like it's a toy and
17:04here we are now with a thing that is
17:07literally a phone you can really use it
17:10to use it as a phone which was a wild in
17:14the future it'll be a hands-free phone
17:15so it with air pods now becomes the
17:18phone yeah it it's but it's really
17:21pivoted in a sense using our lingo to a
17:23health monitor yes we're wolves fashion
17:25and the fashion stuff is still there it
17:28has to look good yeah we should
17:29basically Android once day and it does
17:31look good but it's not that's not it's
17:33not going to be on the cover of Vogue
17:34this year yeah and and you know they
17:36they got rid of the expensive super
17:38ridiculous expensive wine and but this
17:40notion that how closely
17:44aligned health is with the overall value
17:46proposition of Apple to me is very
17:48interesting because nothing is more
17:50personal more private and requiring more
17:53security than health yes and I always
17:55think about like wow like other
17:58platforms don't really stand for privacy
17:59and boy would you be reluctant to use
18:01health information it's been interesting
18:04watching apples sort of positioning
18:06around health because there was a sort
18:07of though there was a point where you
18:08kind of look to this and you thought
18:09well I understand what they mean but it
18:11does sound a bit like blackberries
18:12saying you need a keyboard right and
18:14obviously they've been they've benefited
18:17from all the news flow that's happened
18:18in the last kind of year or two around
18:20Facebook and YouTube and so on which you
18:22know they couldn't have planned for but
18:23and of course you could be cynical and
18:26say well they don't have an ad business
18:27so it's easy for them to talk about
18:29privacy frame but however it is that
18:31you've got there that kind of piece of
18:34strategic positioning is whatever well
18:35for them because you would trust it with
18:38this kind of information where you might
18:39not trust a product from Google or from
18:40Facebook and I think the other thing of
18:42course that I have in the back of my
18:44mind thinking of looking at the chips in
18:46particular is thinking about glasses yes
18:48and so you know we're investors and
18:50magically magically who shipped their
18:52first product which is a Developer Kit
18:53which is you know it's expensive and
18:55it's it's not a consumer product yet
18:56there's an awful lot of smoke signals
18:58that Apple is working on something
18:59similar and the work that they've done
19:02around kind of miniaturization and
19:04integration in the watch and
19:06waterproofing and everything else in the
19:07watches and the rotational and yeah all
19:09the ways everything else that's clearly
19:11relevant to the watch the AR KITT stuff
19:13that they're pushing which doesn't
19:14really make a huge amount of sense on a
19:16phone makes a lot more sense on a when
19:18you're wearing a pair of glasses and of
19:20course the privacy because they're kind
19:22of slightly not obvious seeing about a
19:23pair of AR glasses is it's got a little
19:25classical cameras in it watching
19:26everything cuz that's how it works yeah
19:27that's how it maps a room that's how it
19:29knows who you are and shows your
19:30LinkedIn profile over your head that's
19:32how it remembers that poster that I saw
19:33for a concert two weeks ago you're like
19:35what was it oh yeah it was that you got
19:37a little demon sitting on your watching
19:39everything right we're just or you're in
19:40a store and you want to do price
19:41comparison and shop exams like that and
19:43you don't want to send what you're
19:44looking at to every store or to Google
19:47or Facebook but you Apple is kind of
19:49carefully positioning themselves so she
19:51would be comfortable with Apple having
19:52that kind of and and that's a like in
19:54the terms of how Apple does innovation
19:56one of the things that always surprises
19:58people is they think of something as a
20:01Big Bang when it comes out but all they
20:03did was integrate in years of prior work
20:06and so they are a very long-term company
20:08like how they did Apple pay by starting
20:11with thumbprint yes and working their
20:13way through and eventually it's just
20:15Apple pay is is a fastening lesson
20:17because I think that the same work is at
20:18play for how they're gonna do AR and
20:21glasses even though we don't know
20:23anything about yeah about well it's very
20:25obvious at the watch and on the one hand
20:26an AR key on the other hand a building
20:28blocks for glasses and the contactless
20:29stuff maybe and you know there's a whole
20:32bunch just pieces that they're getting
20:34to work separately I mean I think I
20:36actually read post about this a few
20:37years ago but like the kind of one of
20:39the common buzzwords in the valley is
20:40Minimum Viable Product grave I think
20:42Apple doesn't do Minimum Viable products
20:44what they do is they create building
20:47blocks right so they create the touch ID
20:49and they create AR kit which starts with
20:52each a touch ID started with keychain
20:55and keeps going and some of these of
20:56course a brilliant long-term you know
20:58what you would say some of them are
20:59actual brilliant some of them some of
21:01them are planned and some of them are
21:02just clever reuse of technology yeah
21:04we've got this thing we could do that
21:05with it's your doctor evil plan yeah
21:07they never actually had the plan to do
21:08the glasses they didn't realize though
21:10we could do that but because of the way
21:11Apple works what I think is fascinating
21:12is first they're not out there when they
21:15have keychain and saying stay tuned in
21:17six years when we when we do a payment
21:19yes and then they they're also when they
21:21do payment they don't just announced by
21:23the way these are all the components
21:24that aren't we clever and this is
21:27Apple's focus on the here and the now
21:29and they to me they're planning when it
21:31all does come together very much
21:32resembles sort of landing a person on
21:34the moon but obviously not in scale and
21:36complexity in that they they're like
21:38congratulate us we were heard around the
21:40earth and it turns out when you talk to
21:42the NASA people that was like a hugely
21:44important thing on its own yes like in
21:46fact if they had stopped then they still
21:47would have achieved a lot of science and
21:49that to me is like thumbprint and
21:51logging on like yeah it was a big useful
21:53thing so there's an analogy here that um
21:55the the way Napoleon fought his
21:57campaigns was he had these sort of he
21:59did he had these huge armies because it
22:01was all though conscripted citizens and
22:03so instead of having like 500,000 men
22:06all marching in one place which of
22:07course would be impossible to supply and
22:08control and everything
22:10have set foot army cause that are spread
22:11over front of like 50 miles and that
22:13gives you a normal human almost
22:15flexibility because you can say well go
22:16there and go there and then go and do
22:17this go and do that and they can all
22:20kind of all coalesce and come together
22:21at the decisive moment and one of the
22:23ways I've heard people that Apple talk
22:24about the company is that they yes as a
22:27plant so there's a car project and
22:28there's a glasses project oh cool so
22:30it's in there right yes as well but it's
22:32also that you create abilities and then
22:33you use those capabilities and and this
22:35is again back to Apple being organized
22:38in the management lingo as a functional
22:40organization rather than by product
22:42silos so even though there might be the
22:45like the in fact they're generally
22:47organized as as a giant team of
22:49electrical engineers or a team of
22:51software engineers and then they work
22:53together and so they get career paths
22:54for people and I feel like that's always
22:56where big companies fall down is they
22:59think they need an MBA running a P&L
23:01yeah for something and so that's because
23:03the problem is if they had an iPad group
23:05and an iPhone group and a watch group
23:07then who would be doing the garthe's
23:09they'd have to take people off well and
23:11worse than that they'd have to be going
23:12to that group would have to go to the
23:14watch group and ask for features in the
23:15watch code and the watch people would be
23:17like you understand we have like a q3
23:19deliverable and we can't do this
23:21similarly by organizing this way they're
23:24able to like make big changes like say
23:27we're focused on health now and they can
23:29do the health across the whole software
23:30stack and they can use all the way from
23:33their secure Enclave through health and
23:35through all these parts that are on the
23:36phone and really deliver this capability
23:38one thing I wanted to touch on that I
23:40think people were really quick to point
23:42out was like which I just think was not
23:44really fair or right which was oh yeah
23:46this is great that they're doing
23:46something for health and then they sort
23:48of channeled Facebook a little bit and
23:50said yeah but it's you know call me when
23:52you're doing something for help that
23:53doesn't cost five hundred dollars and
23:54and I I think like everything starts off
23:58expensive like literally everything yeah
24:00but the end they walked into the yet the
24:02cheapest cost now is what three and $250
24:05yeah and but to me what like what this
24:08says is like well yes it first
24:11the first up like people with good jobs
24:13are gonna be able to go buy these
24:14watches for people that will benefit the
24:15most and will have them but all of a
24:17sudden now there's gonna be a whole
24:19industry that's like wow that giant
24:21thing like the size of a cereal box that
24:23your heart rate might not be the best
24:25way to solve this problem yeah and it
24:28will benefit from the technology but
24:29also just the appearance of this product
24:31in the market and these things will all
24:33of a sudden change and there'll be much
24:35smaller bands they'll be dedicated
24:37special-purpose ones using this similar
24:39kind of approach because it will be
24:41waking up the industry too we don't have
24:43to do this so the entry fee the cheapest
24:45iPhone is I think well so the iPhone XR
24:48which is the LCD one is $7.99 yeah it's
24:52750 I think yeah so it's still more
24:54expensive than the original iPhone even
24:56though this is a cheap one but you can
24:57get mandroid phone for $30 today right
24:59not $30 with subsidy in contracts $30
25:02cash in a market in rural Uganda you can
25:05buy an Android phone yeah my second
25:06phone is $30 is the cheap Nokia Android
25:09one that just came out yeah but that's
25:10even that's like 150 but you can get and
25:12you can get it 109 at they don't think
25:14any big you can get it you can get a
25:15cheap Android phone for well under $50
25:17now yeah so that technology is just
25:19which is why there's now three and a
25:20half billion people on earth you have a
25:21small phone and say the technology just
25:23gets confused and so so I think that
25:26like this you know if there was a big
25:29boom I think it was the big boom
25:30explosion kind of release it was really
25:32in like altering the landscape of health
25:34monitoring yeah that's gonna happen yeah
25:36and they've clearly signaled and now
25:38it's just all of a sudden you're just
25:39gonna go okay now what's the next
25:41condition disease telemetry from the
25:43human body then we're gonna need to go
25:44and measure and there's they're on a
25:46treadmill it's also it's also worth
25:48noting that we were hearing rumors about
25:49health stuff before the Watts launched
25:51which was what three years ago yeah yeah
25:53and so they've clearly this is stuff and
25:55you know there's there's patients in
25:57there and their willingness to sort of
25:58sit and wait and so the last thing I
26:00would say is I I just feel like what's
26:03happening to Apple right now is that a
26:04scale that that you just it's
26:08unprecedented in many different ways and
26:11people go oh but Android is even bigger
26:12and Android is bigger but what's not
26:14it's not happening at that scale it's
26:15not command and control it's not
26:17integrated it's it's it is messy the way
26:20that pcs were messy a and so that's why
26:23it's able to scale like that that
26:25messiness is the asset that enables that
26:27but to me what's what's so interesting
26:29is that this puts them in this in this
26:32position to really just add something
26:34and change a whole industry but also not
26:37to worry about like where's the next
26:40customer gonna come from like used to be
26:42this old saying when I was Microsoft
26:43called share is air and and it drove
26:46every level of behavior from the top
26:49down which was like you can't do
26:51anything if you don't have market share
26:52and what's interesting is that's sort of
26:54like the one thing Apple doesn't ever
26:55worry about yes like there I do have a
26:58billion users o billion active Isis now
27:00they have like a billion active users
27:02and so like that's you know I think that
27:05many people like go like wow Wall Street
27:07doesn't really understand Apple still
27:08and in fact what was interesting was
27:09during the day yesterday the stock price
27:11was dropping because of some weird
27:13someone had a spreadsheet model about a
27:16ESPYs and didn't understand it and today
27:18it's up like a bunch because it's sank
27:20in that what they did was really a
27:22brilliant mayor of a new Maximas
27:24maximizing play and what I believe is
27:26that there was just a lot more
27:27technology innovation in there than
27:29those people are giving them credit for
27:30or that the Android ecosystem is
27:32realizing wow integration matters well
27:34the fun thing it's always a challenge
27:36for the one-time equity analyst is it a
27:39partial defense like how do you build a
27:41DCF that includes a section entitled
27:43product it's there will exist but I
27:45don't know what it is yeah how do you
27:47value that how do you forecast if you
27:48could you can't say there wouldn't be
27:50any product you also can't forecast cash
27:51flows from it at least not with a
27:53straight face yeah so it was a big day
27:55there was a lot of a lot of other stuff
27:57the the big lesson I do think that
27:58people should definitely walk away from
28:00his founders it again remember that it's
28:02not just the shiny product yeah but boy
28:04managing distribution managing pricing
28:07understanding how you bring things to
28:09market and do so is as much about
28:13innovation as like what code and what
28:15technology right thanks thank you
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