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This Week in Tech 446
Leo Laporte: It's time for TWiT, This Week in Tech! Big show for you, John C. Dvorak is here, Mark Milian, Nathan Olivarez-Giles from the Wall Street Journal. Of course the big story, WhatsApp, $16 billion! We'll also talk about the Comcast Netflix deal and a little bit of a bug in Apple's source code that's caused a great big headache. It's all coming up next, on TWiT.
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Bandwidth for This Week in Tech is provided by Cachefly, at cachefly.com. This is TWiT, This Week in Tech. Episode #446 recorded February 23, 2014
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John C. Dvorak: Hi.
Leo: Channeldvorak.com. He's a good looking fella. I'm sorry, did I wake you?
John: No, you didn't mention noagendashow.com, it's twice a week now.
Leo: Noagendashow.com, it's twice a week? Double the pleasure of blast-
John: Noagendashow.com, that's the money maker.
Leo: And also with us, brand new- First time, right?
Nathan Olivarez-Giles: Yep.
Leo: Nathan Olivarez-Giles, he is one of the newer guys at the Digits blog at the Wall Street Journal. Welcome!
Nathan: Thanks for having me on.
Leo: Where were you before that?
Nathan: Before that? The Verge, most recently and Wired, The LA Times. Yeah, a few places.
Leo: Great, we're so glad to have you.
Nathan: Thanks, yeah.
Mark Milian: He and I worked together at The LA Times.
Leo: There you go, Mark Milian.
Nathan: Back in the day.
Leo: Formerly LA Times, he's now at Bloomberg Businessweek. It's great to have you, Mark.
Mark: Good to be here.
Leo: We have some really good people to talk about the very, very big story WhatsApp. So, it's a really fascinating story from a lot of angles, and of course the big angle is $19 billion-
John: $350+ million per employee, yeah, that works there.
Leo: That's the highest... First of all, that's the largest acquisition of a VC funded start-up in history. It's one of the largest acquisitions in history. It actually dwarfs HP's acquisition of Prospero's EDS. It's bigger than the Skype acquisition, yeah.
Mark: It is the biggest internet deal since AOL Time-Warner.
Leo: And look at how well that worked out. It's actually close to- What they paid $22 billion or something like that, I can't remember but it's at $19 billion now. So $12 million in Facebook stock, $4 billion, which is 35% of Facebook's cash position, $4 billion in cash. So that makes $16 billion-
John: Is this treasury stock that dilutes the value for everybody or not?
Leo: It is, I think a class C, but I don't know. I'll have to look at that, that's actually a very interesting question for the Bloomberg guy.
John: Yeah, he should know that right off the top of his head if he works for Bloomberg.
Leo: And then another $3 billion in potential stock grants over the next years, depending on performance. So it could be, it's somewhere between $16 and $19 billion. You probably saw the Time Magazine graph, it's the biggest acquisition, a whopping acquisition, a deal of historic proportions, Harry McCracken put together a graph of other acquisitions. Motorola was only $12 billion for Google. And remember, gosh it only seems like a few years ago, when Facebook blew us all away by paying a billion dollars for Instagram. That's nothing now.
Nathan: That was jaw-dropping at the time.
John: They should've held out. They essentially paid, per customer, the paid $100 a head.
Leo: No actually, that's what's interesting about this. Facebook's stock values around $147 per user. What's App was only $42 per user.
John: I thought it was 100?
Leo: No, 42 because they have 450 billion users.
John: Oh, that's reasonable.
Leo: Is that reasonable? You always talk about that number, that's often a number used for this kind of calculation.
John: In the .com era, we used to watch that number all of the time.
Leo: How much a user is worth.
John: Yeah, and it tended to be for cable TV, it would approach $50 in some situations.
Leo: So this isn't a weird number..?
John: But generally, it was $10.
Leo: Yeah, I remember that when Paul Allen bought Charter, he paid something like $50 a subscriber. And everybody bemoaned the inflationary-
John: It was outrageous.
Leo: Actually, it was more like 100 I think. ...Outrageous inflationary amount. Alright, well there's so many ways to slice this. First of all, congratulations to Jan Koum and Brian Acton, the founders.
John: Yep, they're buying.
Leo: You know, one of the big winners is Sequoia Capital, they're the only investors in this. They had put in about $60 million into WhatsApp. They're going to get a return of over $3 billion.
Nathan: They've got to feel pretty good about that right now.
Mark: Yeah, that was a good bet. You said they were the only VC firm that got in, it seemed like Jan wanted to avoid having a bunch of VC's in there with voting power, who are trying to tell them to put ads or whatever in there, so I think he found a believer in Sequoia and they kind of let him do his thing and it paid off for them.
Leo: According to Fortune, Sequoia's stake in WhatsApp is less than 20%, high teens. Which means that more than 80% stays with the founders and the employees. That's a pretty big payday.
Mark: Yeah, Jan especially, is a multi-billionaire, many times over.
Nathan: 45% of the company or somewhere around there I think, is Jan's. I'm pretty sure.
Leo: Yeah, that's $6 + billion. It's an interesting story, when he was 16 he and his mom moved out of Kiev in the Ukraine, leaving his dad behind. They were Jewish, and there was widespread anti-Semitism at the time, came to the United states, according to a really good article written by Forbes, where she did the research. His mom brought a suitcase full of Soviet-era notebooks with her because she was afraid they wouldn't have the money to buy notebooks for Jan's schooling. He didn't like school very much but was a computer whiz, studied networking, was able to get a job out of high school, didn't go to college right away, at Ernst and Young working as a technical auditor, that's when he first met Brian Acton at Yahoo, he sat across from him Actonemployee44@yahoo. He had some money and had been investing in the Tech Bubble, but lost a lot of it when Tech crashed. Both he and Jan hit it off. Jan joined him at Yahoo, they both left Yahoo. And around 2007 I think, they went on a year-long trip traveling around South America playing Ultimate Frisbee, and just hanging out.
Nathan: Sounds like fun.
Mark: They can do that for the rest of their life now.
Leo: They could play a lot of ultimate Frisbee for that amount of money.
Nathan: Buy some very high quality Frisbee discs.
John: And maid.
Leo: Interesting post, this is on FlyerTalk, which is a forum for frequent flyers. May 9, 2009 JKB76, I don't know if this is Brian or Jan but he says, " Hi there, shameless self-promotion I couldn't resist posting here because I wrote this app with people like us in mind, those who travel a lot. Ever since I semi-retired a little over a year ago," must be Brian Acton. "I've been traveling a lot and hated it when people tried to reach me when I'm on the plane or out of the country, so I asked myself wouldn't it be cool if I just set a status for my iPhone, similar to how you can set a status in Yahoo messenger or Skype? Problem found, problem solved, I spent a couple of months developed a little tool called WhatsApp. It can let you set a status like, 'On the flight to Munich, send an email instead of calling me." I would like to hear your feedback and suggestions on the idea." This thread is still alive and if you go to the last page, and there's quite a few people going hey I like that app, nice job. You made some money, didn't you?! Pretty amazing story-
Mark: And a Blackberry app is coming, he says, in the announcement.
Leo: Yes, one of the real success stories of WhatsApp is it's totally cross platform...
Mark: For iPad and desktop and-
Leo: No desktop, which is weird isn't it?
Mark: Which is kind of annoying. Hopefully Facebook will maybe help them out with that.
Leo: Did you use WhatsApp before this?
Mark: I had it, it's obviously not big in America so most of my friends here, I wouldn't talk to, but I spoke with some of my colleagues who were based overseas-
Leo: I had one friend who did a lot of overseas traveling and so that's how I got to know WhatsApp because she would use it all of the time. That's the only reason I had it, I had uninstalled it a long time ago because I didn't need to talk to her anymore and when I reinstalled it, you know, it has not changed much over the last few years. It allows you to send text messages, video, audio, pictures, you can do group or single contact messaging, it takes the contacts from your contact book because it uses your phone number as your contact name.
Mark: Which a number of apps, Facebook Messenger does that now. They let you use your phone number to find other friends to connect with. But it's become big in parts of Asia, but huge in Europe because the European carriers tend to gouge customers and charge extra if your texting with someone who's in another country. I mean, going to another country in Europe is like going to another state here. You can take a road trip to another country, so this has really taken off there, as an alternative to having to pay per message through your carrier.
Leo: Another reason my friend Alan Temper, who is from Spain and speaks Castilian, he'd want me to say that, Castilian, say that it takes diacritical marks very well, you know, accents and circumflexes and that's something a lot of text messaging apps don't do very well. You know Facebook acquired Baluga two years ago.
Leo: Did all of the same things, right? It's identical, that's what they made messenger.
Mark: Except it didn't have 450 million people using it.
Leo: That's the key, isn't it? Have you used it, Nathan? Have you used WhatsApp before this?
Nathan: Yeah, actually, earlier this week I wrote a story just kind of rounding up all of the different apps out there. So there's KakaoTalk, there's Line, apps that are a lot more popular in Asia because they have stickers and you can you can share like animated little characters that will dance around and stuff. Those apps can do far more stuff, and are actually way more popular in Asia. But like Mark said, WhatsApp is kind of where it's at because there's just this big, big momentum. Everyone's on it and, I mean, when I look at WhatsApp I don't really see too much that I want to do with. I don't use it very much because a lot of my friends are in the US, but you know, a messaging service is only as good as the people you're messaging with. So, if all of your friends are on it, it kind of makes sense to be familiar, right?
Leo: It's the network effect, that's what makes Facebook successful.
Leo: In fact, they say in Spain it's almost 100% penetration, nobody does text messaging in Spain. With WhatsApp, there were 54 billion messages December 31st of this year for New Year's Ever. 54 billion, 450 million users. Currently, there are more text messaging going over WhatsApp than all of the SMS services world-wide.
John: That's not 54 billion users.
Leo: No, it's 450 million users, but they send a lot of messages.
John: No you said, I'm sorry. You listen on the tape, ladies and gentlemen.
Leo: I said it right.
John: No, you'll see.
Nathan: Well it's a good thing you're here to keep him in line though.
John: Somebody's got to do it.
Leo: Thank God we're taping this! In any event, it's clearly successful. My question is, what keeps it successful? This is the problem with the Network Effect, if somebody leaves, as they did Myspace, and uses something else- Remember ICQ? That was pretty popular in the day.
Nathan: AOL Instant Messenger was huge back in the day.
John: Who bought- Somebody bought ICQ and screwed it up though.
Mark: AOL bought ICQ.
John: Was it AOL?
Mark: Yeah, and at the time somebody was tweeting a New York Times story that they were covering, saying AOL's acquisition of ICQ gives them access to a new user base, a younger audience that may not like...
Leo: Same thing.
Nathan: Same thing, yeah.
John: Well predating all of this, to be one of the older farts here, this used to be the reputation Xerox had. Xerox used to buy a company and everything would just fold. They bought Shugart Drive, and boom, no more disk drive companies there. They had to go and spin off another one. It was one after the other, and there's a bunch of genius companies, I think AOL was one of them for a ling time. It hasn't happened yet with Facebook, but Yahoo is the best example of this. They buy a bunch of stuff and then they languish it and it drops dead.
Nathan: But Yahoo tends to buy things that don't fit into it's mission, whatever that may be. Delicious was an example of just buying something because it's available.
John: Perfect example.
Mark: Buying something because it's available.
John: That was a product a lot of people liked.
Mark: Yeah, Yahoo's core-audience is mass, sort of mass consumption. They're a portal and you know, it's the homepage my mom has on her computer. And to go after the sort of niche tech-y audience that Delicious was big in, which was just a weird pick for them. But I think WhatsApp, their user base pretty much fits into where Facebook wants to be.
Leo: Well, that raises a couple of questions because they already had the technology, right?
Mark: Oh, they- Yeah.
Leo: They didn't gain anything, by the way, WhatsApp was writtne in Erlang. Scales nicely but I doubt it will integrate well into the PHP infrastructure over at Facebook. In fact, they say that they are not going to integrate it, that it's going to be a standalone app-
John: That's actually wise, that's smart.
Leo: Well you've got to be careful. The real challenge here is you can't monitize it very well because one of the things that is a big deal at WhatsApp is no Ads, and they even say that when you first sign up, 'Why We Don't Take Ads."
Nathan: And they say that they're going to keep it that way, ad free. Which-
Leo: You have to because-
John: Alright, I'll go out on a limb, this is a disaster. It's the stupidest thing these guys could have possibly done.
Leo: I agree with you 100%, do you agree?
Nathan: You know, I think $19 billion right now seems like an insane amount of money, and it could be a really stupid move, but they need to get more and more users, they need to grow. They just got 450 million people who are using their service.
Leo: Aren't all of those people also using Facebook already?
Nathan: They might be using Facebook, but they're not using Facebook for messaging. So maybe they're using Facebook to see like, their friends' baby pictures, or sharing a new story, so maybe they're not sharing everyday in the same way. Here, this is a very sticky app, I think something like 70% of the people who use WhatsApp use it every single day.
Leo: Average is 1,200 messages a month sent, a little over 2,000 received, 40 pictures a month-
Mark: The trouble with these types of apps, the way that they're designed, the way that they become so popular, is there is no lock in into these apps. Your contact list is what's on your phone, that any other app use-
Nathan: You can talk it and go anywhere else you want, yeah.
Leo: Nathan thinks it wasn't a bad idea, Mark?
Mark: I think there are two schools of thought. Like we talked about earlier, the price per user is not crazy compared to Twitter or Facebook. But that's as-valued by the stock market, so-
John: But before you go on with that argument, the reason that price per user was extremely important as a metric in the late '90s, in particular, is because those users translated to dollar revenue.
Leo: There's no revenue in this, it's a buck a year, maybe.
John: So if you have a guy and say you're paying $10 a head, that guy has to generate $10 in revenue, at some point to get your money back. If you’re paying like $50-$60-$70 whatever these guys are paying, you say $60, $50-
Leo: I say $45.
John: $45 is a lot.
Leo: Well, especially since it's a buck a year.
John: That takes 45 years to pay out.
Mark: That's the only revenue model they have right now. It's still a relatively young app. They can introduce stickers, which has been, actually, a surprisingly big business-
Leo: Stickers is not a $16 billion winner.
Mark: You know, it's a small business, but for the Asian companies like Tencent and Line...
Leo: It's Path's entire model.
Leo: There are other conceivable models, like micro payments, that perhaps, could be big multi-billion dollar businesses if you can integrate them into WhatsApp and not lose the user base. I don't think they could add ads, but I think they could add functionality.
John: That would be cool.
Nathan: Well since you bring that up, because a lot of the Asian messaging apps like Line and others are actually using their messaging apps kind of like a platform to get to payments, to get stickers, but then also, to serve up games, to serve up e-books, all sorts of things on the top of it. So they're kind of trying to leverage that network that exists-
Leo: I think you can bet that Facebook is aware of that and says this is what we're going to have to do with WhatsApp. But you're never going to get into China, because China is already occupied, you know, you're going to get the countries you've got, I don't know if the growth- The growth more than doubled this year.
Mark: They did, but I don't know if that growth curve can continue.
Nathan: Well one thing that was interesting, there's a story that I think it was the China Daily Morning Post or something like that, that in 2012 it said 45% of Hong Kong was using WhatsApp so it is popular in mainland China...
Mark: I was talking to one of my colleagues in Taiwan after the deal went down in Taipei, we were talking about the sort of lock-in effect and he was saying him and all of his friends in TaiPei have WhatsApp, but they also have Line and Wii Chat. They have them all and they send stickers online and then they'll switch over a new app to chat and it just depends on who's on-
Leo: If you're in WhatsApp, you can only message What's App users, you can't across platform...
John: Now we need an intermediary product that all four of us could design right now and it could talk to all of these different apps.
Leo: It's called Facebook. I think there's a certain amount of this, by the way it could be called Facebook, because you could say okay, this will interoperate with Facebook Messenger. Maybe we'll acquire another one.
John: What if you don't want to be a Facebook member?
Leo: I bet you-
John: I'm not.
Leo: But I bet you, as a WhatsApp user, you'd become a default Facebook user over time.
John: I won't, I won't. I refuse!
Leo: Oh, good luck.
Mark: They’re going to have to be careful with how they play this—
Leo: They have to be very careful…
Mark: —because already, the acquisition has gone down, and you can see a lot of users online who are scared that Facebook is going to eat up all their data, and ship it over to the NSA. I’ve been talking with the Mark Zuckerberg of Russia, this guy Pavel Durov, who—
Leo: Oh, he’s an interesting character…
Mark: His new project is—
John: The Mark Zuckerberg of Russia…
Mark: Of Russia, yeah.
Leo: Yeah, I’ve been reading the articles about him.
Mark: He’s the founder of VKontakte, which is the biggest social network in Russia. His newest project is called Telegram. It’s essentially a WhatsApp clone for messaging, and their usage has sky-rocketed since the deal, because they play up their encryption and the security of the messages that you send on their service — how it’s unbreakable. So, they’ve already seen a lot of people in Spain and the Netherlands and Germany – some of these very privacy-conscious markets – jumping from WhatsApp to Telegram.
Leo: This would be a smart thing to do with WhatsApp. Maybe Mark Zuckerberg steps forward, and says “I want to be the Pavel Durov of the United States...”
Leo: No, actually in seriousness, steps forward and says “We’re going to make this like Threema. We’re going to make this encrypted, and we’re going to make it secure. We know your privacy counts. We are going to…” The problem is that nobody’s going to believe it. Nobody’s going to believe it.
John: When has he ever said that? And not even that, but he doesn’t believe that himself. He likes the idea.
Leo: No, he says the world – life – is better when you’re connected. Yeah.
John: He likes the idea of no privacy.
Leo: Yeah. So, here’s another possibility: This was a pure paranoia play. I mean, this is a company that’s growing at a faster rate than Facebook.
John: That could be.
Leo: They’re a threat to Facebook. Instragram, I think, was a paranoia play. You buy Instagram not because you plan to do anything with it, but just to—
John: You’ve thought this out! That’s why this segment is so long!
John: You’ve been sitting there, stewing with this information, because you’re like—
Leo: Isn’t that what we’re supposed to do?
John: [snapping fingers] You’re popping with one idea after another. It’s non-stop!
Leo: Well here’s one rumor: according to — I think…Was it Fortune, [that] said that Google had offered them $10 billion earlier this week?
Mark: Fortune and The Information have done some reporting—
Leo: The Information said that Google – crazy! – six months ago offered WhatsApp an unspecified amount of money to let them know before they made a deal with anybody else. Apparently, according to The Information. I’m here Friday writing this… No. WhatsApp turned them down. I think that’s a funny thing to say. “Look, we don’t want you, but please: If somebody else tries to, let us know.”
Mark: “Especially Facebook.”
Leo: Yeah! Is it credible, that Google could have offered them $10 billion?
Mark: Well, Google has more cash than Facebook. Google could have offered however much Google wants to offer.
Leo: Fortune says – they have two sources that say this – that Facebook offered WhatsApp a seat on the board, and Google did not. You know, that doesn’t surprise me, because Jan Koum and Brian Acton clearly want to maintain control. And, if they have a seat on the board, they have a shot at derailing any effort to absorb the company, and things like that. So they want the power, they don’t just want the money. They want to protect their baby. But I think Facebook did this because they were scared.
John: Of what?
Leo: Of – but very rightly – of getting “MySpaced.” That’s their biggest problem, right now, is that Facebook needs to… I’m sure that they have a metric in their mind: “If we get to this certain point, then we’ve got critical mass, and we can’t be ‘MySpaced.’ We cannot be replaced by some other social network, but we’ve got to get to that point.” And Mark is all in. This is basically him pushing in every bit of his chips, ten percent of his cash position — no, thirty percent of his cash position, ten percent of his company’s value. “I’m going to go all-in, because we just have to survive several more years, and then no one can assail us.”
John: Bah! That’s laughable.
Leo: You think there’s nowhere you can get to that you’re safe?
John: Right. Yeah, you have to just be running all the time. It reminds me of like, there’s different kinds—
Leo: Well, he’s going to do that.
John: Well then, he’ll be fine, as opposed to MySpace, which stopped running once Murdoch bought it.
Leo: He’s almost — remember, Mark’s only spending inflated stock. Mostly spending inflated stock.
John: Right. This is the time to do it.
Leo: He’s taking advantage of this IPO.
John: You do it when you can, but to maintain a running position, let’s say like Adobe does with Photoshop… They keep changing as though somebody’s chasing them, even though I’m sure there’s nothing chasing them except – what? – the [sic] GIMP, on Linux.
John: But they keep modifying. They’re moving ahead as if someone’s chasing them, and that’s how you stay—
Leo: That’s how you do it!
John: —at the top.
Leo: What was it Andy Grove wrote in his book? “Only the paranoid survive.” CEO of Intel.
Nathan: You can look at Instagram as kind of a similar defensive move. I mean, Facebook became this place where everyone was sharing their photos so much, to the detriment of Flickr. Now Instagram is becoming the one place—
Leo: That’s right!
Nathan: —where everyone is sharing their photos, especially the younger user base. So what did they do? They bought Instagram, and they left it alone. They didn’t absorb it into the company, they didn’t potentially ruin it. Now, here you have another thing. Instead of folks messaging on Facebook, they’re messaging on apps like WhatsApp.
Nathan: So, they’re going to buy it. Ideally, if they do what they say now, leave it alone. So maybe there are other defensive ways to—
John: Where does Snapchat fit into the picture?
Mark: Nowhere, any more.
Leo: Well now, I don’t laugh so much at Snapchat saying “I’m not going to take your $3 billion.” Maybe they were right! I mean, $3 billion is a paltry sum.
Mark: Well, WhatsApp… Snapchat doesn’t really talk about their user numbers, so we don’t really have a good sense of how big they are. Generally, when you don’t talk that means you’re not as big as people think you are.
John: That would be your normal guess, yeah.
Mark: WhatsApp has talked about message numbers, user numbers. 450 million, I can assure you, Snapchat is nowhere near—
Leo: That’s a lot.
Mark: —that big.
Leo: No one is.
Mark: It’s primarily a US phenomenon, Snapchat.
Leo: No one’s that big. It’s twice Twitter’s size. No one’s that big, except Facebook.
John: I think Snapchat needs to be kept — you have to keep an eye on that company. I’m just saying, just as something that’s interesting—
Mark: I like, yeah, I use the app. I think it’s a fun thing for exchanging messages.
John: Really? Sexting? Or what do you do with it?
Nathan: He sends a lot of pictures of his dog.
Leo: You’re like all other—
Mark: A lot of pictures of my dog, yeah.
John: Yeah, exactly…
Nathan: His dog.
Leo: You’re like all us other old guys. We assume they must be sending dirty pictures…
John: Hey, sexy! Send me a picture!
Leo: The kids go “What?! No…”
John: Actually, it’s my partner who keeps asking for pictures.
Leo: Oh really? Adam?
Leo: Adam Curry wants pictures of your junk?
John: Not me, no…
John: That’s good. You know, he’s listening to the show, so he’ll have something to say about that, on the next show.
Leo: He usually has something profane to say to Leo. Did he like the bobble-head, by the way?
John: I have it in a box. I haven’t shipped it yet.
Leo: Oh, come on. I’ll help you. We’ll ship it. Next time, bring it, and we’ll ship it. You’ve got to give it to Adam.
John: No, I have it aside. I put it aside specifically to send.
Leo: So Pavel Durov is an interesting— I’ve been reading your articles, and I think this is fascinating, because we don’t know about him. Because he’s Russian.
Leo: But is he, really, the next Mark Zuckerberg? Is he building an empire in Russia?
Mark: He’s certainly already built an empire. I talked to him just a couple days ago, after the WhatsApp deal.
Leo: Very secretive.
Mark: Yeah, and he’s becoming less so now. We did a feature in Businessweek a little while ago, about how he may have been a Kremlin target in Russia, because he’s sort of a big, successful, self-made entrepreneur in Russian, who is a contrarian, especially politically. I mean, I talked to him a couple days ago. We were talking about Libertarianism – he’s a Libertarian. He’s very “against the grain” in Russia. He’s spending some time in Berlin right now, working on Telegram. He was essentially telling me “I have all the money I could possibly ever need, just after VK, and now all I want to do is build products that the whole world can use.” That’s what he’s doing with Telegram, which he’s set up as a nonprofit entity, which is kind of interesting…
Mark: He says he has absolutely no plans to sell. His engineers are well-compensated, and he doesn’t need the money. The Russian Internet market is — Telegram is targeted at the whole world, it’s not very big in Russia right now.
Leo: Is it like a Facebook, basically? It’s a social network? It’s more of a WhatsApp, right?
Mark: VK is a social network, just like Facebook.
Leo: I see.
Mark: It looks very similar to Facebook. His new app, Telegram, is essentially a WhatsApp close.
Leo: It’s a messenger, I see.
Mark: The Russian Internet market is interesting, because their language is so different from any other language on Earth, pretty much, so Facebook, Google, all of these companies that have essentially taken over the world – except for China – Russia has been the exception for them as well. So VK is much bigger than Facebook in Russia. Yandex is the Google for Russia, they have vastly more market share than Google. So, Russia has been an interesting market to watch, just because it’s almost like a little melting pot that’s isolated from the Internet.
Leo: You were smart to move to Global Tech, because it’s very clear that nobody succeeds in the US alone any more. WhatsApp is Facebook saying “This was not used in the US. We need to have a presence globally, in the markets we don’t participate in.”
Mark: And if you listen to Mark Zuckerberg’s conference call, he had to take great pains to express to shareholders why they should believe in this acquisition.
Leo: Right, right.
Mark: You may not have heard of this, it’s not big in America, but if you look at Latin America, if you look at India, if you look at Europe, WhatsApp is massive. The story that I wrote, after the WhatsApp deal, is that this is essentially buying markets that Facebook, for the most part, already has a hold in. They’re essentially buying more attention from their users there. But it’s not going to make much headway in Asia. I mean, WeChat has China locked down, that’s the WhatsApp of China. Like we were talking about earlier, LINE is the WhatsApp of Japan; Kakao is the WhatsApp of South Korea… In all of these big, developed markets where there are a lot of smart phones, WhatsApp is not going to be making much of a dent there. So Asia is still going to — Facebook is still going to need to figure out how to do something big in Asia.
Leo: I just have to feel like Zuckerberg must feel like he’s on a hamster wheel; that there are always going to be these up-and-coming… And now, more than ever. He’s just raised the ante… Robert Reich, the former Secretary of Labor, wrote an article saying this is bad for America, because it doesn’t create jobs, it’s just a huge…
John: Right, he could have bailed out Detroit.
Leo: He literally could have.
John: With less money.
Leo: Yeah. He could have bought the Bahamas, several times over.
John: Yeah. I think Reich is right, and so I’m sticking with my position: this is a bad thing.
Leo: I’m with you. I think, though, I have to say that it probably is the case that Facebook felt like it had to do it. Because if they don’t, their position slips away.
John: I think Yahoo felt they had to buy broadcast.com…
Leo: Yeah, that was a mistake… More so because you gave Mark Cuban a pulpit, now he’s got the basketball team.
Mark: The Mavericks.
Leo: He’s annoying…
John: And now he’s on TV all the time. He’s on that tv show, the “Shark Tank.”
Leo: Shark Tank… That’s really the cost of buying broadcast.com
Nathan: He’s done good for the Mavs, they won a championship.
John: It hurt the culture. It hurt the culture.
Leo: It hurt America. Mark Cuban: bad for America. Hey, I’ll tell you another company that’s bad for America, it’s Comcast. We’re going to talk about that.
John: We’ll get a note, by the way.
Leo: sDo you think Mark’s listening?
John: He listens to everything. I wrote something once, and he sent me an email the next day.
Leo: I’ve never met the guy. The only time I’ve ever — I was at South by Southwest, he was going to give a lecture, and he started off so confrontational and annoying, and then accidentally the fire alarm went off in the building. (I think somebody went and pulled it.) And we all filed out relievedly, and we never came back. That’s my only experience with Mark Cuba: saved by the fire alarm. Boy, you’ve got a good panel today, and en fuego as well. Mr. John C.—
John: I have to stop eating during the show, apparently.
Leo: Oh, don’t listen to them. You’re having lovely NatureBox snacks. A South Pacific plantain that’s better for you Pringles but tastes every bit as good.
John: It is good.
Leo: I like the Sweet Blueberry Almonds.
Leo: That’s an up-and-coming sponsor. I should give them a plug now.
Leo: Yeah. NatureBox.
Leo: Astonishing. We also have Nathan Olivarez-Giles, who’s brand new at the Wall Street Journal “Digits.”
Leo: When Mossberg left, how many men did it take to replace him? Eight? [laughs[
Nathan: Well, there were two gadget columnists, we now have two more. But then there have been a few other jobs created, such as mine.
Leo: It’s great, I’m not complaining.
Nathan: Yeah, so there’s a big team there. When AllThingsD as a whole left, they rounded up a lot of people—
Leo: Right. I think that the Journal clearly realizes how important this is. The Times did the same thing with the replacement of Pogue, they’ve replaced him with a few other people. This is a big beat, thank goodness!
Nathan: Well, it’s kind of becoming ubiquitous, I mean tech is everywhere—
Leo: Yeah, everybody cares.
Nathan: It’s in politics, it’s in education, it’s in all facets of our lives, so you can’t really ignore it.
Leo: Glad to have you with them, thanks for joining us.
John: Yeah you can.
Leo: Oh you can ignore it.
John: You just ignore it.
Nathan: Well, you’re not even on Facebook, so…
Leo: Exactly. You can’t cover this space without being a member. I mean, I don’t want to be a member, but —
Leo: You have to be a member!
John: You can’t cover this space without being on Facebook?!
John: Are you kidding me?
Nathan: But he is in Snapchat, so he gets some cred there.
Leo: Are you?! Showing your junk?
John: Yeah, but only for the sexting.
Leo: Yeah I thought so. Also Mark Milian is here from Bloomberg. He says you don’t have to say Businessweek unless you want to do Droopy Dog. Thank you for that. Releasing us.
John: Come on!
Mark: Thank you.
Leo: [imitating Droopy Dog] “Bloomberg Businessweek.” Thank you.
Leo: The show today brought—
Mark: Just walked right into that one.
Leo: —brought to you by one of New York City’s Greatest Places to Work. Two years in a row, Crane’s Business has given SquareSpace the top vote.
John: How do you even know where the company is? Is it in Sunnyvale?
Leo: SquareSpace is in New York.
Mark: New York.
Leo: Oh I’ve been there, it’s beautiful.
Mark: And they had the Super Bowl commercial.
Leo: Yeah, yeah.
Mark: A half-million dollar Super Bowl—
Leo: SquareSpace is looking for people to work for them — passioNathan designers and engineers who want to make the Web a better place. (This sounds like a contest!) SquareSpace will fly you and your spouse or partner to New York City for a weekend on them for an interview, so you can check out SquareSpace in person. They actually have a beautiful space; they’re great people, I like them. You need to submit an application before March 15th: beapartofit.squarespace.com. Isn’t that great? Looking for work, engineers, designers? beapartofit.squarespace.com. We love SquareSpace, our “Inside TWiT” blog runs on it. Frankly, I wish our whole site did. It never goes down, you cannot bring a web site down with SquareSpace. They’re always improving the code, the back-end… It’s hosting plus the software – twenty-five beautiful templates to start with – and you can try it for free. You don’t need a credit card, just go to squarespace.com, click the “Get Started” button… You can choose your template, you can start designing your site. You can use the Logo Creator tool to design a custom logo . [For] a lot of small businesses, that’s just a blessing. It’s easy to use, but if you have some questions they’ve got live chat and email support 24/7, plus a completely redesigned Customer Help site for easier access to self-help articles. I like that! Now – oh, the raccoon. Hmmmm. Chad’s giving us a new logo right now, and I love it! There are help articles and video workshops on the web site. They do e-commerce now on every one of their plan levels (even the $8 a month level) which is great for nonprofits, cash wedding registries, school fund drives… But if you want to start a business, SquareSpace is a great place to do it. Starting as low as $8 a month, and when you sign up for a year, you get the domain name free. Some of their developers work on mobile, too. They’ve got a great blog app that lets you post. You can change layouts, you can monitor comments on the go. The metric app that just came out lets you check site stats, like page views and unique visitors. You can even check your social media followers. I just, this is such a great—
John: I’m applying right now.
Leo: Would you, please?
Leo: You don’t need Facebook, you need SquareSpace.
John: No, I don’t care about the job. I might get a free trip to Manhattan.
Leo: Oh you should. Now, with no credit card needed, start building your web site right now. squarespace.com. If you decide to buy – you don’t need to do this unless you decide to buy – use the offer code “TWIT.” That’s all, just “TWIT,” and we will help you with ten percent off. How about that? SquareSpace, we love them. And yeah, let me repeat that. They’re looking for designers and engineers. You’ve got to be good, though. You can’t just be some guy.
Leo: Some schlub trying to score a free trip.
John: Oh, well that’s no good…
Leo: beapartofit.squarespace.com, you’ve got until March 15th. They are on a grown spurt. That’s why they did a Super Bowl ad. I think they got some venture money, or something. I think they’re taking off. They are taking off.
Mark: I think they did one round, a few years ago. But their revenue is insane.
Leo: I know! I’m so proud to be part of that.
Mark: It’s all subscription-based, and…
Leo: Isn’t that great?! If ever a company deserved to succeed, it’s SquareSpace. And Facebook, you better not buy SquareSpace. I’ll be peeved. I’ll be miffed. Alright, speaking of miffed (and this is complicated, so I understand this is complicated, and I’m going to give you a little back-story before we talk about this): essentially, the story is that Netflix has agreed to pay Comcast for high-speed streaming to Comcast customers. Now here’s why it’s complicated: If Netflix were just using the public Internet, they would (like anybody, like we do), they could just go in on the network. But they understand that forty percent of all prime-time traffic in the US is Netflix traffic, that they use a lot of bandwidth, that if you can give them two or three megabits per second that is consistent, sustained, they can do 2k – and now, on some things, even 4k – video. And they want that bandwidth. So what they’ve been trying to do it get a “peering” arrangement with Comcast. That’s basically a direct connect between Comcast and Netflix. In fact, they tried to get Netflix servers in Comcast operations centers, inside the data centers. Comcast hasn’t agreed to that, but they will connect to Netflix servers at data centers operated by Cogent and other companies that provide the bandwidth for Netflix. Comcast said “If you want us to do that, you’re going to have to give us money.” Netflix said no, and according to Reed Hastings, since October, the bandwidth available to Comcast subscribers (and Netflix pays close attention to this) has dropped twenty-seven percent. Of course, my presumption is somebody at Comcast has got a knob, and they’re turning that knob.
John: Little knob…
Leo: They’re turning the knob down until they squeeze them hard enough, and then Netflix says “Well, alright, fine.”
John: Why wouldn’t you do that?
Leo: Because — well, if I were Netflix I might do that, depends on whether they can afford it. One of the issues that has come up is that this could put them out of business. It depends on how much they’re paying, but there’s a point beyond which they can’t afford to pay for peering.
Mark: And then they’ll raise prices on customers.
Leo: Yeah, we’ll end up paying for it.
John: How much do they have to raise the price to pay for this, whatever it is? It can’t be more than a dollar.
Leo: I think they’re in a very price-sensitive business. If you’re charging $7.99 a month, who’d charge $10 a month? They’re going to go “Nah…”
John: You could jack it up. When the cable business began it was dirt cheap, and then all of a sudden now it’s $100. I’m not convinced of this. I’m surprised that Comcast and these guys haven’t gouged these characters long ago.
Leo: Well… By the way, it’s just the beginning, because Verizon and AT&T are both trying to get deals like this. It’s the end of Net Neutrality as we know it. It is very bad news for consumers, and here’s my point of view: It’s basically setting up toll roads on the Internet. It’s as if UPS said to you, John C. Dvorak, you know… I’m Amazon, I’m shipping to John C. Dvorak. I pay UPS to ship the product out. It’s as if the driver pulled up to you and said “Hey John, you want this package? Give me a buck. Otherwise, I’m bringing it tomorrow.” It’s just like that. It’s double-dipping.
Leo: We pay Comcast for full and unfettered access to the Internet. It’s in Comcast’s interests to give Netflix a nice fat pipe, because that makes me a happy customer.
Leo: But you know why this doesn’t work? It’s that Comcast has a monopoly. There’s nowhere else to go.
John: Well maybe that’s the problem.
Leo: I agree it’s the problem.
John: Government regulation, they let this stuff go out of control, like this. We used to have, when I was a kid, we used to have ISPs all over the place.
Mark: Not any more.
Leo: Those were the days of 300-baud modems.
John: Yeah, whatever. It’s beside the point.
Leo: When you were a kid.
John: I’ve still got that at my place. I’ve got ATT I can use, I’ve got sonic.net.
Leo: But that’s beside the ATT copper.
John: That’s beside the point.
Leo: Not really.
John: I pay a lot less than I would if I was on ATT. I pay almost nothing for the Sonic.net.
Leo: Oh I agree, 3rd party ISP’s on DSL is the way to go, but it’s not as fast as your cable.
John: No cable is faster, but it’s more reliable and it has a steadier connection. It’s much better for Podcasting by the way.
Leo: In most places we’re in a duopoly, where you have the cable company and the phone company.
John: Right and Google is trying to move in to make it a triple.
Leo: That would be awesome.
John: Of course they’re moving in to the weirdest places.
Leo: I’ll give you the arguments on both sides. On the point of Comcast they’re asking Comcast to peer with Netflix and Comcast is saying “we’ll do it, we’ll give you better access to our customers but you’ve got to pay for that. Netflix’s point of view is Comcast is basically holding us up.
John: Put your own network up.
Leo: You can’t that’s not how it works. It’s called the internet John.
John: That’s what Google is doing.
Leo: I don’t think Netflix has Google money. So who is at fault here?
John: The Government.
Leo: Unfortunately the chairman of the FCC is a former cable company lobbyist. The FCC by the way and I think this is related, has decided - remember they lost in court over the attempt to enforce net neutrality regulations. They could have appealed, they’re not going to. They could have declared internet service providers common carriers. That would have given them jurisdiction. They have decided not to. They’ve basically folded.
Mark: They’ve decided to re-write the rules.
Leo: I think what the court was saying is that you don’t have a congressional mandate to do this and unless you declare common carriers then you don’t have a mandate. They’re not willing to do that. So I think Congress is going to have to step up, but I don’t think they’re going to because do you know how many lobbyist Comcast has in Washington?
John: More than there are Congressmen.
Leo: 100 lobbyist! They pump millions of dollars into Congress. There is no way Congress is going to stand up to them and there’s no way the FCC is going to…
John: Well who’s to blame for that? The corrupt Congress or Comcast doing their job?
Mark: Well the x-factor is this Comcast Charter deal. That’s going to come under some anti-trust scrutiny and I think Comcast is going to try not to step on any toes.
Leo: Let me give you an example. Comcast recently bought NBC Universal. One of the deals that they made on that was that Comcast would not slow down its internet traffic and would preserve net neutrality. They blatantly said we’re going to screw with Skype – You know the real problem is that Comcast is in the video streaming business. They have stream pix. They’re doing the same thing Netflix does. They’re a competitor.
John: Who let the camel in the tent?
Leo: Oh. Well I apologize.
Nathan: So it’s his entire fault.
John: Well I mean you voted these guys in and have you ever voted your Congressmen out and just rotate through people? I mean entire Congress is a bunch of incompetent –
Leo: Oh that will fix it!
John: If everybody would vote everyone out every two years it would.
Leo: Ok I like your optimism. It's a merger with Time Warner; nobody's going to stop them. By the way Om Malek was on the show last week and he says there's no way they're going to stop this merger. His opinion is – and this is Comcast position, there's no overlap in customers.
John: You’re not buying out your competitor.
Leo: It’s not as competitive.
John: I know it's a great argument.
Leo: Because we set up a monopoly –
John: To begin with because the whole thing was set up with all these people taking pieces of different parts of the country and then oh because we don't want one big company running everything they say it's not my competitor. That's what happened with AT&T in the phone business.
They basically bought Mobile’s back.
John: Who was the first one? I guess West Bell is one of those sleaze ball companies.
Leo: They just bought everybody. It's like a snowball rolling down the hill.
John: It’s the government. They don't stop this. They should just say no. What's the big deal?
Mark: They said no to AT&T mobile.
John: I was stunned. I was advocating that every column. I would write about it constantly. But I didn't think – when it didn't go through I was stunned.
Leo: Eric Lipton wrote in the New York Times this week on Comcast’s web of lobbying and philanthropy: we don't know the number because they have more than 100 registered lobbyists in DC alone. The team includes five former members of Congress also Meredith Atwell Baker, former FCC Commissioner; the one who in fact voted to approve the deal for Comcast and NBC to unite. If you've been watching house of cards this is all sounding extremely familiar. The storyline is the same thing. Comcast is also done an interesting thing, they have a nonprofit foundation, and they fund groups like the United States Spanish Chamber of Commerce who interestingly enough, hours after the Time Warner Comcast merger announcement issued a statement saying it was a win-win for American businesses.
John: Yes for the two companies.
Leo: A win-win for Time Warner, Cable and Comcast. It's a little depressing frankly. Does anybody want to defend Comcast here? Nobody? There's a guy out there raising his hand. Who do you work for?
Man in the audience: I'm not going to talk about that. Peering Agreements are usually beneficial for both. In this case you got Netflix sending an awful lot of data to Comcast.
Leo: You’re right a typical peering arrangement is symmetrical. You send me data, I'll send you data. And that makes a lot of sense. One of the reasons frankly we get sweetheart deals on bandwidth was because some of our providers want to have a back stream so they… AOL for a long time carried our content because they wanted to have peering relationships with systems that were sending them a lot of contents.
John: Why don't you ask me why I'm going to defend Comcast?
Leo: Why will you defend Comcast?
John: Because it’s “comcastic”.
Leo: Oh shut up!
John: I haven't used that gag in a while.
Leo: I agree that there are some not unrealistic arguments for why code jet among others should pay for access when these peering are not symmetric; but on the other hand I think it's and Comcast commercial interest to provide fast access to YouTube and Netflix. By the way I was told by another networker that Amazon is coming up against this. Amazon Web services another example of a company that's pumping a lot of data. Almost all apps nowadays run on Amazon Web services. To get a peering relationship with the company like Comcast - Comcast wants money. But don't we pay Comcast for fast access?
John: Here’s what's going to happen. The whole idea is to get more money and so you're going to be the big Netflix guy and I'm not. I don't need - it's going to be like the cable thing.
Leo: But it doesn't stop with Netflix that goes to YouTube, it goes to Amazon, it goes to TWIT. They are going to come to me and say if you would like full access to our users –
John: It’s the same model they use for Showtime and HB and all the rest. You pay an extra dollar you get a fast connection to Netflix. You pay another extra dollar you get a fast connection to Amazon. You pay another, and it would be packaged.
Leo: But they're not charging us.
John: They’re going to do that.
Leo: And charge Netflix?
Leo: Why not?
John: Why wouldn't they charge Netflix?
Leo: They need more money to pay for Congress.
Mark: Once there is a direct relationship showing harm to the consumer then that's when the government stands up and is at arms.
John: You’re cracking me up.
Mark: This is a theory.
Leo: When do consumers stand up and say hey I'm getting crap service? Because what happens is that most people don't know any better and they say Netflix really sucks. They don't cancel Comcast because they don't have a choice. They cancel Netflix.
John: Because they are used to this model. You get HBO. How many movies do you watch a month? One, two, maybe watch a couple of things? It's not worth the money but you'd pay for it. It's just the old menu thing, the items, the bundling.
Nathan: That's not how it's going to play out for the web. That might be the cable model, nobody likes the cable model. Everybody hates their cable bill. It's inflated; we know we pay too much. Everybody's been complaining about it for a long time. On the web the expectation is that everything is free and you have access to it equally, not choked down, not one is slow. So if you see a Netflix charge on your Comcast bill it's not going to work.
John: Comcast has the business service which cost more, they have the high-speed that cost more.
Leo: There are some of us and I'm one of him that will pay anything for fast Internet.
Nathan: I'm not one of those, maybe you can pay it and everything, but I think there's a lot of people who can't. I think what we'll see instead is we're going to see more of this kind of deal where instead of the customer paying a little bit more for access to whatever services they want; you're going to see companies paying the guys controlling the pipes, in this case Comcast, and then you're going to see the charges going up for how much we pay for Netflix, or how much we pay for Spotify. We’re going to pay more no matter what. It's not going to come in the bundle; it's going to come in these little fractured pieces.
Mark: You were subscribing to a startup ISP in San Francisco right?
Nathan: I was, Monkey Brains.
John: How did that go?
Nathan: It was fantastic. It was superfast. It wasn't the most reliable and steady. There were times when we would kind of fallout. I made that decision and I was glad I did.
John: Are they still in business? Are you still using them?
Nathan: I actually got pushed out of the mission once my landlord tried to jack up rent prices.
Leo: That is Google's fault.
Nathan: I can't get monkey brains in the Internet now. So I'm actually on - I think it's Comcast.
Leo: I can't even get the sunset in the…
John: You can’t get the sunset? Oh I'm sorry.
Mark: It’s walkable, there’s good food out there.
Leo: Why do they even call it the Sunset? You can’t see the sunset.
Nathan: So ATT’s talking about this right. Talking about doing things with a specific company where maybe Facebook pays for the data they use for Facebook. So whenever you use Facebook it doesn’t bite into your data cap.
Leo: In my opinion undermining net neutrality because….
Nathan: I don’t think any of these people want to see net neutrality because it doesn’t really work out that way.
Leo: But we do.
Nathan: But if net neutrality existed deals like this wouldn’t need to take place.
Leo: I think ATT sponsored content is a similar plan that would let some content providers have better access if they pay for it.
Nathan: That’s a scary thought because then services like Netflix or anyone else won’t be able to be displaced when a new upstart offering something genuinely better – They won’t be able to be “Myspace” you might say.
Leo: That’s my problem and I see, as somebody who is creating an internet television station, the price on this free public internet. It’s threatening to me. Now I’m already entrenched and established and it probably doesn’t affect me, but it’s going to affect anybody who wants to start something like this. When No Agenda finally starts doing video…
John: We’re not doing video. We’re going to do twice weekly; Thursday and Sundays at 9.
Leo: 9A.M Pacific.
John: If you want to listen live.
Leo: 12 Noon Eastern.
John: Whatever it is.
Leo: I take the time to do the math for our listeners so that they don’t have it.
John: It’s a podcast. We expect most people to download it when they feel like it. It’s the convenience.
Leo: Do you stream live though?
Leo: So people can listen live.
John: They can if they want. We also edit them, sometimes we stop the show. It’s not like this where you live the tape and if you make a screw up then you fire Chad. So it’s a lot different.
Leo: You don’t even have a Chad!
John: No we don’t have a Chad.
Leo: So you have no one to fire. That’s why.
Nathan: I can’t imagine what he’d be like unfiltered. That’s something I want to see.
Leo: Dvorak unfiltered.
John: DHM Plugged, that’s another show you should go see.
Leo: I think you’re seeing it actually. What’s sad is that there’s nothing to say about this except we’re screwed.
John: I think this is just the way it’s going to go.
Nathan: You guys are bumming me out.
Leo: Yes me too. There may be hope because Om Malek last week talked about it and he’s talked about it before. The fact that his apartment building buys bandwidth wholesale and in effect becomes an intermediary service provider for the people who live in that apartment.
John: He lives in an apartment?
Leo: Yes, but one of the reasons he does is he gets amazing internet, and this may be – and another way to do that is this is community Internet and a lot of folks have been advocating for this for a while. A town like Petaluma might buy wholesale bandwidth that they wire then - the people of town with, bypassing all of this. And that is the risk I think or companies like Comcast, because if you squeeze people enough at some point they revolt don't they?
John: They could cut down the wires.
Leo: That's the way to go. That's the problem, we want Internet. We're hooked on Internet. They are counting on that; that we're not going to quit Comcast and that we're not going to cut the wires.
John: Are you getting your money’s worth? If you're paying 100 bucks a month for your Internet are you getting your money's worth? If you answered yes what about 105? What about 110?
Leo: It has gone up and by the way another interesting thing, these companies realized, I remember talking to Cablevision years ago and they said we don't want to be in the Internet business we need premium content. They knew what was coming and so they carefully worked on their pricing and so the difference now between having Comcast, cable and Internet or Comcast and Internet alone is $10.
John: I don't even use it I use the dish network.
Leo: Right, people end up - it's so little difference buying the cable, so they get the best of both worlds. We're just getting used to paying 100 bucks more for our cable.
Nathan: But it's still hovering around a premium price point and you still have a lot of folks who can't afford to pay 100 bucks a month, and it's becoming in our society where you need access to the Internet to, I don't know go to school, work, to complete homework assignments, to vote, get a job. If you're not literate online you are screwed. It's becoming a social issue. It's great if you can pay 100 bucks a month but a lot of folks can't.
John: 39.99 for sonic.net and you get free Internet, free international calls to Canada and anywhere in Mexico, although long distances free, all the local services are free, it's unbelievable. 39.99 a month.
Leo: It’s fairly consistent. I like sonic. James Jasper runs that company and he's just up north. He's a good friend.
John: He’s going to start laying cable you know.
Leo: I know.
John: Laying fiber.
Leo: He’s fibered a couple of towns up here. He is very forward thinking. We'll get him on and talk to him, but meanwhile Comcast - a plea for poor struggling Wall Street journal writers; keep the price low.
Nathan: I'm doing alright.
John: Now don't ever say that, that's a huge mistake.
Leo: He’s not, he's struggling, and the poor guy I had to give him some macaroni and cheese earlier.
John: Journalism 101 - never say you're getting enough.
Nathan: You guys did give me a shirt when I got here.
Leo: Mobile World Congress is in Barcelona, already some announcements, we will talk about it. In fact Samsung already pissing Google off, didn't take long… But first a word from Fresh Books; you know what pisses me off, or used to at the end of every month, doing my invoices. If you're a freelancer this is the worst time of the month. You've got to get to all the bills and all the invoices and then if you forgot to invoice then you don't get paid and if you put it off for too long… I was very relieved in 2004, that's how long I've been a FreshBook customer. When Amber McCarthy told me about FreshBooks she said you don't have to - you know I was using Microsoft Word and Excel to keep track of receipts and expenses. It just saved me. I love FreshBooks. It's just a simple Cloud-based accounting system. Tax time is coming up, your accountant will love you if you use FreshBooks or whoever does your taxes. If it's you you'll love you, self-love, it's the best kind. If you're not using FreshBooks you'd better. Hunting for receipts, digging through invoices, going through your records one by one - the worst. FreshBooks makes it all simple and of course you create professional invoices, capture and track expenses, get real-time business reports, all with a couple of clicks. You can work anywhere with FreshBooks mobile app, on your phone or tablet. The sooner you start using FreshBooks the sooner you can start focusing on doing what you love - not paperwork. For a limited time you can try FreshBooks free, not for 30 days but for 60 days. We've got a two-month trial for you right now. To get started go to Getfreshbooks.com. If you’ll do me a favor and when they ask how you heard about us; put This Week in Tech. FreshBooks, getfreshbooks.com and get that extended 60 day free trial. Just-in-time for tax time, it'll get you through the tax season. That would be nice wouldn't it? I was glad to find out about them. Getfreshbooks.com. We are on the air talking about this week's tech news, John C Dvorak – channel dvorak and of course noagendashow.com, with Nathan Olivarez-Giles who is new to the Wall Street Journal, the WSJD.com is the place to go. It's on my beat check daily, every morning.
Nathan: Thanks! I appreciate that.
Leo: Yes. Does that these stand for digits or just digital?
Leo: Big story on WSJD: Samsung, 1st of the announcements coming out on Mobile World Congress, the new Galaxy gear, actually is just the Gear 2. They dropped the Galaxy part.
Nathan: they also dropped Android which is, these are actually pretty significant little moves for Samsung. They are now running their own operating system. They made this all themselves, no Google here.
Leo: It still does require an android smart phone, probably a galaxy3, galaxy4 or maybe the newer ones. It will work with their galaxy products and they will continue to run Android for now, but the fact that they're dropping Android from the gear2 is interesting. Gear2 is a simpler device, it doesn't have a camera. That was a weird thing anyway.
Nathan: Well actually they have two versions; they have one with the camera and a lower-priced one without a camera. There are a lot of things that are interesting. One thing to me that's the most interesting is this comes out five months after the original Galaxy Gear, which was pretty much universally thumbs down in the review.
Leo: I don't see anybody wearing a Gear anymore. Pebble is the only one that seems to have any traction at all. I don't know why, I think that's dumb too.
Nathan: I've yet to find a smart watch that really makes me want to wear it every day. I don't think this will be the one that converts me but you know, five months later… I don't know if I'd bought the first one I might be feeling a little bummed out that it's already obsolete, less than half a year later.
Leo: Yeah. Is that David Hasselhoff?
Nathan: It was.
Leo: Wearing a smart watch.
John: It’s like an old photo they Photoshopped.
Leo: Remember the whole ad campaign for the gear watch was, “You’ve wanted this forever” and they had James Bond with an arm band?
Mark: And they had Dick Tracy? That was a great ad.
Nathan: That was the best thing about the Galaxy Gear was that one ad.
Leo: It didn’t make me want the watch, but…
Nathan: I love Dick Tracy and James Bond. That was cool.
Leo: Nothing wrong with that.
John: What is the Huawei smart band. Is there such a thing?
Nathan: Yes, it is kind of their answer to the Fit Bit and to the Nike plus Fuel Band. Huawei is now making it. Here is the thing. It’s more of a fitness band than a smart watch. All these things can tell you how many steps you took, what time it is.
Leo: Wait a minute. It has a pop out ear piece for your voice calls?
Mark: There’s that. That’s actually kind of cool.
Leo: Well, but do really want to walk around with a headphone coming out of your watch?
Nathan: No. It’s wireless.
Leo: Oh, you put it in your ear. I see. It’s like a Blue Tooth. Oh.
Mark: That’s kind of a cool idea.
John: This says if you want to get better reception, lift your arm way up in the air. Look like an idiot.
Nathan: One more thing to get lost. I don’t think I want an earpiece on my watch, personally. Maybe that’s just me.
Mark: These health bands were huge at CES. It seems like every electronics company there had one.
John: Who sitting here has one on?
Mark: I have one in my pocket.
John: In your pocket?
Leo: It’s unusual though because usually when I have tech Journalists on they are all wearing one. There you go. Is that the Fit Bit Flex?
Nathan: That’s the one they just recalled.
John: Take it off, you’re going to get electrocuted.
Leo: No it has nickel in it.
Nathan: It gives a rash.
Leo: Apparently it has nickel in it and it is allergenic and once you get a nickel allergy, your life is over. You can never touch a nickel again! Imagine.
John: Today’s nickels I don’t think have nickel.
Leo: Oh that is right they are now zinc. Go ahead and touch a nickel. But if you found an old Buffalo head nickel, don’t touch that.
John: Drop like a rock.
Leo: Apparently there is a nickel allergy and something like 12 or 14 percent of all the people who were wearing it were getting rashes.
John: Its curious that the number was that high so it means that people with some sort of nickel weirdness were drawn to this thing.
Leo: It’s common.
Mark: They are going to make the next one out of peanuts.
Nathan: Or gluten.
Leo: You know what is weird is that they recalled them. It’s a voluntary recall so if you don’t have a rash I guess you can keep them. But they’ve recalled them all and I guess they will send you a check in about eight weeks. For the value of the Force. They are not going to give you a new Force.
John: I’m guessing that if you send them a nasty note and said, “I sent my thing in, where is my money” and kept the watch you would still get a check.
Leo: Go ahead and try that and see if it works.
John: I don’t care. Not really interested.
Leo: This is a category that seems to have problems. Remember Jaw Bones Up, which failed and they had to recall all of them? This is a tough category.
Mark: Well these are all companies that are relatively new… this is such a new product category. These are companies that are trying to figure it out. They didn’t exist a few years ago.
Nathan: And Pebbles was a kick starter project and now they are actually making a watch that looks like a watch, has a metal band. They are kind of stepping it up a little bit.
Mark: And there were glitches in those first kick starter products that they sent out. My brothers flashes every second and dies after a few hours.
Leo: Mine is in a drawer so I don’t know what it is doing. It is lonely. It is wishing it would be resuscitated. I think a lot of this is the market just saying, “Quick get to market before Apple does it”.
Mark: I think this is the one product category where Samsung is racing and that is why five months after they are releasing they introduce the next one. In other words they need to make this work before Apple comes in and acts like they invented the idea.
John: It could be a bluff. Maybe Apple never does this. They look around and say, “This is crap”. You know Ford pulled this stunt once. When they were making the bigger and bigger…
Leo: I remember the Model T. That was a great car.
John: Remember when they were making bigger and bigger. The first one was the Explorer and then the Excursion, then they showed one - and all you saw was a six door, this huge six door Ford, and just to screw with GM.
Leo: They did it just to…?
John: Yeah. They never released it.
Leo: It was just an Artist’s conception?
John: So I think this might be going on. It’s a great gag by the way.
Leo: Are they screwing with Apple or is Apple screwing with them?
Nathan: No we know for sure that Apple is working on it.
Mark: They work on a lot of things though. It’s entirely possible that they throw this out.
John: But Ford showed a 6 door and then never brought it out.
Leo: No I think Apple is going to do it. They’ve hired too many people and I think the perception of Apple being a failure if they don’t release it, is a significant issue. So they’ve got to release it.
Mark: And Tim Cook has said that they will introduce a new product category this year. So it could be a watch, it could be a TV.
John: I think if it’s a watch I’m short in the company.
Leo: The other Apple story real quick if you have IOS7 you do want to patch right now. There is a 7.0.6 update that went out yesterday, an emergency update because of a bug in SSL making a man in the middle attack very easily. That means that somebody could highjack your SSL connection to a bank, to Amazon, to retailers, get your credit cards and other stuff. It apparently is a flaw both the IOS and OSX. Apple says, “We are going to release an update for OSX as soon as we can”. But nothing at least as we go to press. Do we go to press?
Nathan: As we go to internet.
John: They said go to press?
Nathan: No he did.
Leo: Remember in the days when you were a young cub reporter?
John: I was a cub reporter. When I was a kid I was a cub reporter.
Mark: With those glasses?
Leo: Remember those days? What else is coming up? Anyway, update it, because this is not an insignificant problem. I don’t know what you do if you’re on IOS6. I guess they’ll update that as well. More Mobile World Congress stuff. Just a program note; we will be here tonight. 11:30 PM Pacific, that’s 2:30 AM Eastern time, 08:30 UTC, to cover what could be a very bizarre announcement for Nokia. Nokia, which is in the process of being acquired by Microsoft, just waiting for Chinese regulatory approval. Said to be announcing an Android phone.
John: What do the Chinese have to do with it? Why do the Chinese need to tell our American companies what to do?
Leo: Well Nokia is Finnish. I don’t know. I’ve asked the same question in my mind but I never said it out load.
John: EU used to pull this crap constantly.
Leo: But they’ve got EU approval.
John: Nowadays they don’t buck so much. They used to say, “You can’t do that.” It’s two American companies trying to merge.
Nathan: But it’s two massive Global companies that sell all over the world and they have locations for those markets as well so I think the regulatory approval is for that. If you’re going to do business here, then you’ve got to meet our laws as well.
Leo: And China is a very important market for Nokia.
John: I think they are just pushing us around and telling us what to do. It’s an abomination.
Leo: You ought to write to Congress. Call our Trade Representatives. Anyway, we’ll be here late at night tonight.
John: And by the way, what difference does it make to China one way or the other?
Mark: Maybe their Government buys Nokia phones.
John: No, I’ll tell you what it is. It’s Huawei.
Leo: They’ve protecting ZTE and Huawei.
Nathan: Which do compete with Nokia.
Mark: And they push Cisco around since Huawei and ZTE got beat up in the US.
Leo: Anyway, just my thoughts. So we’ll be here 11:30 PM Pacific time. Mike Elgan and I will cover the Nokia phone announcement. We do believe it will be an Android phone. I think Mobile World Congress is rapidly becoming the most interesting event of the year because Mobile and wearables are the hot thing right?
John: They’ve got the best food.
Leo: Barcelona. Where you get Ratatouille. And the Paella .
John: I don’t know about the Ratatouille.
Leo: Barcelona Paella is different than the Paella in the other parts of Spain.
John: Spain isn’t really one country. Okay, well that put a damper on things.
Leo: You know did I mention we’d be here at 11:30 tonight?
John: You’ve been complaining about this since this morning.
Leo: And then tomorrow the big Samsung Unpacked event that will be at 11:00 AM Pacific, 2:00 PM Eastern, 19:00 UTC. We’ll be here for that as well. Likely to be the S5.
Nathan: Galaxy S5.
Leo: What do we know? What do we think? What do we expect?
Nathan: Hopefully a phone made with higher quality materials.
John: It’s going to be a phone with better materials.
Leo: Well that’s one of the things Samsung says. Slimy plastic.
Nathan: Not a good look.
Leo: Although my Note 3 has that nice plastic stitched leather look.
Nathan: Do you like that?
Nathan: You have a Note 3?
Leo: I do.
Nathan: Seriously? Do you use that as like a tanning bed? That thing is gigantic.
Leo: I keep up on Samsung, because they are, in fact, 80% of the Smart Phone Android market. They are the dominant player. But I have to say I abandoned my Galaxy S4 and even more so the Note 3 because of the crapware.
John: What happened to your Motorola you were so happy with?
Leo: I still use my Motorola.
John: Oooh. You got the wood one.
Mark: So it is AT&T only then right?
Leo: No, not anymore. The Moto maker is everywhere.
John: You even have this thing monogrammed. It says Chief Twit printed on the back.
Leo: I wish they had done it with one of those wood burning kits you know that they used to get in camp?
John: I can do that.
Leo: Can you do that?
John: I have one of those.
Leo: You have one of those?
John: Yeah. Here I’ll just take this with me.
Mark: Here is what we know about the Galaxy S5.
Leo: Thank you for taking us back on track.
Mark: Larger 5.2 inch screen. Sharper display.
Leo: Whoa. 5.2? The S4 is 5.
Nathan: It just keeps getting bigger and bigger.
Mark: This is what our Reporter in Seoul and our Reporter in Paris came up with.
John: Reporter in Paris. That’s the gig you want.
Leo: Eating baguettes. Drinking coffee.
Mark: Improved battery. Improved camera.
John: Improved. What does that mean?
Mark: Better?! We couldn’t learn exactly how improved those two were. Samsung may start selling the phone for less than previous models.
Nathan: Off contract?
Leo: You know they’ve been able to get the The Modo X about $300 off contract? I think there really is pressure to get the off contract prices lower because you can’t grow the market with the off contract prices $700.
Nathan: That’s only a play for your US market. You almost have to retain the price because the iPhone is seen as the phone - $200.
Leo: We have subsidies right?
Mark: The carriers may be more likely to push the Samsung if they can make a little higher margins with that phone.
Nathan: But they’re not going to charge us any less when we go in to sign a new 2 year contract.
Mark: That’s probably true.
Leo: I’ll be looking for tomorrow with interest is the crapware issue because I really do feel like Samsung has gone too far. It was pretty clear that Samsung wanted to distance themselves from Google and Android but Tizen is one thing they are doing. They had a developer conference last month and I think they really want to get to the point where they don’t have to say, “We are a Google phone” but “We are a Samsung phone”.
Nathan: They are already to that point.
Leo: They are very close. Touch Wiz has customized it heavily. They’ve got apps in most places that replace the Google equivalents that are Samsung apps, not Google apps. They don’t have the Google services yet. That’s a big issue. Things like location services which you get from Google search which you get from Google. I really feel like Samsung has been moving away from Google. I also feel like that is why Google got rid of Motorola because they really used it as a lever I think with Samsung. Remember the South Korean government passed a law saying that crapware has to be un-installable? Samsung made an agreement right at the same time as the Motorola mobility sale was announced to Lenovo. Samsung announced, “Okay, we’ve made a deal with Google. We’re going to make a purer Google phone”. So I will watch with interest to see with the S5 - is it a purer Google phone or has Samsung continued to push away. I think this Galaxy Gear story might be an indicator that they’re going to continue to push away from Android.
Nathan: They’ve made it very clear that Tizen is where they see their software future. They are not necessarily going away from Android, they say. But they are trying to build up Tizen as a punch for punch counterpart, something that you can choose.
Leo: So you think that is just intended for the developing nations or do you think…?
Nathan: I think it is intended for everything. I mean Tizen has had a lot of setbacks. We’ve actually been covering this a lot at the Wall Street Journal. There are a lot of carriers that have backed out of supporting Tizen phones so far. Right now they are kind of on.
Leo: It is a Samsung product?
Nathan: It is a fully Samsung product. It is interesting because really software has been a weak point for Samsung. Yeah, there is Touch Wiz but a lot of folks aren’t using these alternative apps that Samsung is preloading. Like you said this is one of the only reasons you are kind of neglecting those phones for Motorola.
Leo: I use Motorola because it is as close to a pure Google experience as you can get.
Nathan: Exactly. There is really kind of becoming a growing battle between Samsung. They’ve leveraged Android to get a foot hold market and now they are going to try to take that next step and say, “Okay. We are our own thing. We have our own software. We’re still going to use Android here if people want that. Give them a choice.” And that is the thing, Samsung can deliver a new phone, tablet, fablet, smart watch, anything they want.
Mark: How long have they been saying that a Tizen phone is going to come out? I mean they’ve delayed this project.
Leo: I heard they are having trouble with it.
Nathan: They are having a ton of trouble with it.
Leo: What kind of trouble?
Nathan: A lot of different carriers.
Leo: Besides the carriers? Is there technical issues?
Nathan: A lot of delays. Technical issues as well. They’ve also had a hard time attracting third party developers.
Mark: I think that’s the big one. How do you start with a smart phone platform now? Look at Microsoft. They started two or three years ago, and get developers excited enough to build apps for it.
Nathan: That might be if Nokia, as the rumors say, if they are building an Android phone why else would you do that if not, because people want Android apps. They want Android. This is why Amazon is using Android on their Kindle.
John: Why can’t they make an Android compatible phone? So in other words you had the Tizen OS and it was compatible with Android apps and problem solved. In a sense it is supposed to be all open source and everything and if I’m a developer I don’t care if it goes on the Tizen phone. Why don’t they go that route?
Mark: While Android is open source there is very specific guidelines that Google sets for phone makers on how they can design the software, so you can do whatever you want with Android as Amazon has shown. But then you can’t put the Google apps on it and that is where all the apps are.
Leo: According to AppBrain there are 1,132,053 Android apps right now. And I should also point out that only 22% of them are any good.
John: I would say less than that!
Leo: Actually they do a graph where all apps, that is the red line you see and has jumped significantly in the last couple months, regular apps, that is the blue line. And then low quality apps are the green line. I don’t know what low quality apps are. Look at the number of new apps added. Stunning number of decent quality we’re talking over 100,000 added in December. In a month. So if you’re somebody looking for a phone I think that’s something you would consider.
John: How do you find a good app? You need to do more app reviews.
Leo: We already have an app show for the iPhone. We have a very good Android show all about Android which has the App Arena which is fabulous where each of the hosts suggests an app and then they fight it out. And whoever has the most physical strength wins! Jason really wants to launch a new Android app show so I think we will do that. You are absolutely right. Discovery is tough when you have a million plus apps.
John: It’s impossible.
Nathan: There is that and then there is also the issue that Android runs on so many different things, and there are so many different screen sizes and processors and options as to what the hardware could be. So you can’t really have a consistent user experience when you have inconsistent hardware. Like the Gear has a 2 inch screen and then 1.5 inch screen and then you have the Note - how big is your Note 3 screen?
Leo: Oh, it’s 5.7 I think.
Nathan: So, not to mention there is a 12 inch Galaxy Note Tab Pro extra 13 something supersize. I mean that’s just a reality situation.
Leo: Bigger is better. We have more from Barcelona coming up and a lot more too. Speaking of all about Android, if you miss this week at Twit, there was so much and fortunately we have a little minute long piece that will give you some of the highlights.
Mark: It’s the house ad, John!
Leo: Let’s see what you missed this week on Twit.
Leo: And we have a big week ahead, Mike Elgan in our news department has the look at the week ahead. Mike.
Mike Elgan: Coming up this week wall to wall Mobile World’s Congress coverage starting with the Nokia event tonight at 11:30 PM Pacific. We are also covering Samsung’s big Unpacked 5 event tomorrow morning and 11:00 AM Pacific. In fact tune in all week on our extensive Mobile Wold Congress coverage. Back to you, Leo.
Leo: Thank you Mike Elgan, News Director here and host of TNT every morning Monday through Friday 10:00 AM Pacific, 1:00 PM Eastern, 1800 UTC. We also have Tech News tonight, we have a night news show now with Sarah Lane as our Anchor, and that is at 4:00 PM Pacific.
John: Are you falling behind in advertising? You have to run house ads?
Leo: No we still have plenty of ads and here comes one right now. Thanks for reminding me. I don’t want to do house ads. It’s not like we have an avail, but I feel like if I don’t let people know all the great stuff they just won’t realize how rich and full the experience here at Twit can be.
John: When you run the house ads on the other shows, because you apparently run house ads all the time…
Leo: No, I actually don’t.
John: This is the only time you run house ads?
John: So you never promote this particular show, we’re on as we speak?
Leo: Never. I don’t need to. This show is, by far, our largest show. Everyone in the world knows about TWiT.
John: So now it’s essentially the cash cow, which you just said.
Leo: It’s a cash cow.
John: It’s a cash cow, and you are just letting the cash cow die.
John: You’re not promoting it.
Leo: Alright, let’s get right on that. Actually, you know, Lisa wants to buy billboard ads in Silicon Valley. Do you think that’s a good idea?
John: Oh, absolutely.
Leo: She wants to buy television ads around the country. Do you think that’s a good idea?
John: The television ads are a little less important, I think. I think billboard ads are a good idea.
Leo: Yeah, and then we’re going to get a bus wrap.
John: It depends on what your CPM is on the billboards.
Leo: We’re going to get a bus wrapper on the fifteen mission. I think that’s going to be big for us!
John: Or the Google bus!
Leo: On the Google bus, that would be great. That’s a great idea.
John: But they won’t let you do that.
Leo: The problem is, the people we want to know about the show are in the bus, they don’t see what the outside is.
Leo: Problem, yeah.
John: Won’t they know? Because they see it while they’re standing in line waiting for this idiotic bus to come by.
You could get a picket line there with TWiT.tv signs.
Leo: Right! That’s marketing!
John: That’s marketing.
Leo: That’s what I want! TWiT is gentrifying Petaluma, ruining the red here in Petaluma, it’s gone through the roof and I blame TWiT. That’s a great idea! We’re going to have protesters outside these windows for every show from now on. Our show today, brought to you by Citrix, we love these guys and their GoToMeeting is absolutely the best way to hold meetings. Who likes meetings? And yet, without them, I think a lot of stuff doesn’t get done. Sometimes those email exchanges go on for hours. Lisa’s got a great thing. She says after three emails we’re having a meeting, we’ve got to have a meeting. Because you can cut through the garbage and get to the solution. It’s also great for brainstorming, meeting and collaborating with coworkers and clients. Developing quality ideas and solutions. We had a great creative meeting the other day, and you know what we used? GoToMeeting. Those HD faces cameras mean I can see people all over the country, all over the world. Of course, we share the screen so we can see the presentations that collaborate on the documents. GotoMeeting is phenomenal. I want you to try it. It works on Mac, PC, and Mobile devices. In fact pretty much everything you’ve got, you can even present from an IPad. You can share the same screen, you can see each other face to face, and you can use the audio on the IPad or the computer, or device, so you don’t have to get a conference bridge. The audio is part of the GoToMeeting software. I just think it’s great. As well as the video. GoToMeeting.com, click the try it free button, use our promo code TWiT. You’ve got thirty days waiting for you, absolutely free. GoToMeeting.com, promo code TWiT. Speaking of smart watches, we keep hearing a rumor that Google is going to do it. They’ve patented stuff, according to this story, also in…
Nathan: From the Wall Street Journal. Such a great publication.
Leo: I’m sorry. And you’re still friends with him? You know, Bloomberg is good too.
Mark: The friendship is strained.
Leo: Bloomberg is good too! There may be an Android powered Smart Watch by Google, made by LG.
Nathan: Which is what they did with the Nexus 4 and 5 Smart Phones. So they know each other well, LG and Google. They seem to work well with each other. What we’re seeing, and what some of our sources are telling our reporter, Darren Barcelona, is that this will integrate very nicely with Google now. Which, if you guys have an Android smartphone, you know it sends you information before you go looking for it.
Leo: I would love that.
Nathan: Yeah, so you check in. My flight reservations coming up, there’s a Google now card. The weather is there. It tells me what games are coming up for my favorite sports teams. All sorts of really fantastic stuff. So imagine that on your Smart Watch. It could be potentially, be pretty cool.
Leo: It seems to me that Google has got the inside track because of Google now. That makes it more valuable, than just something that’s going to give me notifications.
Nathan: It’s something Pebble doesn’t have. It’s something Gear doesn’t have. It’s… Really nobody else can really match Google now.
Leo: According to your story, it won’t be announced at Mobile World congress. It’ll probably be announced at Google IO, which is this year in June. They’ve moved it back to June.
Nathan: That would make sense if it’s a Google device. It’s a Google branded device.
Leo: And IO has been so popular because they give away crap.
Nathan: Yes, lots of stuff.
Leo: It’s the Oprah stuff you know. Look under your seat.
John: This week it’s a car.
Leo: I don’t think they’re going to do it anymore.
John: A driverless car! No everyone gets a driverless one.
Leo: A driverless car?
John: Everyone gets one.
Leo: It’s just waiting for you outside. I bet you you’ll get a watch.
John: One after another.
Leo: You’ll get a watch.
Nathan: Are you talking about a Hot Wheels or you talking about, like, something that can actually pick up and use?
John: Well you wouldn’t be driving it!
Leo: A driverless Hot Wheel. There you go. But this year they’re having a lottery to get into Google IO. It’s so jammed you have to send them an application and they’re going to have a random drawing.
John: I don’t know why they don’t just get their act together.
Leo: What do you mean?
John: Well I mean there’s other ways, I mean, people need to go to this because they’re developing stuff or they need to cover it…
Leo: I think the problem is people like us who fill it up because we’re just press. And there’s no room!
John: No, they should just stop giving stuff away and make it for what it’s for!
Leo: You’re right.
Nathan: Well they do stream over the web. So you can still watch it and you can still get a lot of valuable information if you want.
John: Yeah, but it’s still a networking thing, you have to be there to yak with somebody. Oh hey! Bill I haven’t seen you for a while, let’s have lunch. Yeah sure!
John: And that’s the end of it. But at least you said it.
Mark: That doesn’t sound that valuable.
John: Well, it’s kind of valuable because you get to take it off, Okay, I asked him for lunch, but the guy never showed up.
Leo: So is this one of them Google April fools jokes or is this real project tango?
Nathan: It is real. It is very, very real.
Leo: The idea is that remember Google sold Motorola mobility but kept the R&D division.
Leo: And this is apparently something they were working on. The projects tango is a device that has a connect-like camera built into it. The prototype is a 5 inch phone. Software designed to track the motion of the device while simultaneously creating a map of the environment. A quarter million 3D measurements every second. Updating position and orientation real time. Build a 3D model of the world around you with your phone. They say imagine. John I’d like you to imagine this. Playing hide and seek in your house with Super Mario.
John: Weren’t we talking about something like this about six months ago. And Google was trying to collect photos?
Nathan: Are you talking about Photo Sphere? Where you can take a photo of your environment and…
John: Yeah, it was either that or something… Leo and I were discussing it and I was complaining that was just a cheap way for Google to get a bunch of pictures for their Google….
Leo: No! They wouldn’t do that!
John: Yes! Don’t you remember this discussion?
Leo: What this reminds me a lot though, is Gerry Ellsworth and her cast AR glasses, which did almost the same thing. It would project a game space into your real world environment. This is actually even more sophisticated because…
John: This is exactly what we were talking about!
Leo: Yeah. Well you can look at the screen and see the augmented, it’s augmented reality.
Nathan: There’s a level of that. There’s also outside of gaming, you can say that you’re visually impaired and this phone has a 3D model of your house and you’re walking around it can tell you make a left here, make a right there. There’s going to be a door knob here.
Leo: Ah ha! Not just your house, but the world around you! You could go to JCPennys. It could walk you through it.
Nathan: Maybe you could go to a public space you’ve never been to before but they already have an indoor map, and they’ve actually been working really hard to get indoor mapping off the ground. Photo Sphere has been a part of that.
Leo: So John was right in a way, they do want to collect these images.
Nathan: They want to map the entire world, inside and out. There’s even a program that they have to map the inside of businesses. When I use to walk at Wired, we got them to come in and map the inside of our office.
John: This place is mapped, right?
Leo: We did that too. Yeah, yeah, yeah.
John: He had a guy here.
Leo: Maps.google.com, right?
Nathan: So this could be a way to get more of that, sort of, mapping data. All of the time from your phone which you’re carrying with you all the time anyway.
John: They’re crazy about this!
Leo: So you can get that data.
Mark: I’m going to go out on a limb and say, I don’t want Google to map every inch of my house. Continually, all day, all the time.
Leo: But this way when you lose the cat, you just say, “Okay Google now…”
John: Where’s the cat?
Leo: (Laughs) “Where is my cat?”
John: That’s how they’re listening in.
Nathan: That’s horrible! That’s what connect is too. It’s always on, always listening.
Leo: I think it’s awesome!
Nathan: Can you think of any government agencies that might be interested in always on always listening cameras? I can’t but…
John: Yeah, all of them!
Leo: It gave me ten sounds that cats make.
Mark: Oh, it found your cat!
Leo: It says, the ten sounds that cats make.
Nathan: So there you go.
Leo: Yeah, that would be useful. So here’s my office. I don’t have as many hats in this picture.
Mark: Is that a Santa Claus hat?
Leo: Oh yeah, I got all kinds of hats. Yeah. I think I’m sitting at my desk during this process.
John: If people out there are bored ever, and they want to like, just think, ever so often I’ll get a bottle of wine. You like to drink wine.
Leo: I love to drink wine.
John: And they think, this wine is really good. I think I’ll take a drive past the winery and see what their environs look like.
Nathan: Click and drag there.
John: Go on Google and click drive around bored o sphere. It’s actually quite fun. It’s very entertaining.
Leo: Click where?
Nathan: Now wouldn’t you like to apply that to…
John: Click back over.
Nathan: ….driving through other people’s houses and looking around.
John: Now click and drag.
Leo: Oh I can drag. Oh there I am! Look I have no face!
Nathan: Yeah, they blur out your face.
Leo: But my dog has a face. What about Ozzies privacy, I ask you. Anyway, you can do that yourself. Go to maps.google.com and search for TWiT and you can walk through. That’s what Wired did, probably.
Nathan: Yeah. Two hundred prototype phones are sent out of these product tango phones.
Leo: This is what they did with Google glass, isn’t it? Where they had Google Glass explorers. They sent out more than that but…
Leo: This seems to be a good model for Google to… Hey! There’s no food in the kitchen! I wish this were real time. Can we make this real time?
John: That’s the future. That’s one of these days.
Mark: Project Tango.
Leo: I remember, I was watching… remember the Boston Bomber and he was in the boat, and they had Google Satellite maps of the boat? And Jennifer said, “Why can’t I see the bomber in there?” And I said, “Well it’s because they took those pictures away.”
Nathan: Well supposedly, in Google Earth, the stars and the sun and all that stuff, that’s in real time. So you can watch an eclipse in real time taking place.
Mark: That’s rendered though. It’s not real.
John: Who cares? What difference does it make?
Leo: Good enough! Looks real!
John: Looks real, might as well go for it!
Leo: You know, Toy Story is not a real movie. So…
Nathan: What do you mean it’s not a really movie? I always saw it in theatres, I have it on Blue Ray. How is it not a real movie? Tell me more!
Leo: Woody is not really a cowboy.
Mark: Agree to disagree on that one.
Leo: Google Fiber is picking nine new metro areas if you didn’t get Google Fiber…
John: This is exciting!
Leo:... On the first round. If you weren’t in Austin, or Kansas City, or Provo Utah. You can be maybe, your chance has come!
Nathan: Or Phoenix Arizona.
Leo: Does Phoenix have Google Fiber? No, But they could!
Nathan: It’s one of the handful that are….
John: Why don’t they do Berkley, or making something in the Bay area?
Mark: They’re talking about the San Jose area.
John: San Jose? I don’t live in San Jose!
Leo: You mean why don’t they do my house? Is what you’re saying.
John: Yeah exactly!
Leo: No one knows.
John: Well I know.
Leo: It would help my business if we had Google Fiber here. Milo Modin, who’s doing this, we’ve got to get Milo on, he is great! Remember Milo?
John: Yeah. When does Milo get out of the office? It seems like he’s working for Google, he use to answer your email but now he’s too busy.
Leo: Yeah, well he’s Milo Modin. He’s VP Google Access Services.
John: Yeah, so he’s just…
Leo: So you’ve tried to get ahold of him?
John: Well I’ve got ahold of him like a year ago, and ever since then he’s like, “Ah too busy, too busy!”
Mark: So were you going to see…
John: The guy is worth millions of dollars. He doesn’t need to be this busy.
Mark: Are we going to see the sort of stunts that we saw the first go around on the cities battling out. Didn’t one of them change their name to Google Kansas?
John: They suggested it.
Leo: I think that they’ve said we’re particularly looking at cities that we already know the city government is very interested. This may be like the second round of candidates.
Nathan: These are also major metropolitan areas. Like, there is no significant mass of people here. I mean, Atlanta, Phoenix, San Antonio. These are decent sized cities with a lot of folks.
Leo: And tech areas too.
John: Somebody in the chat room asked what speed. We’re talking about a gigabyte.
Nathan: A gigabit.
John: A gigabit to the home, all fiber.
Leo: Al though, symmetric. That’s two ways.
John: Yeah, a two way gigabit.
Leo: Although, they’re working on a ten gigabit as well. So your newest installation, you could get 10 gigabytes.
John: An expensive router for that.
Leo: What would you need, what would you do with that? 10 gigabits.
Nathan: All kinds of Netflix. 4K all day.
John: Netflix. (Laughs)
Leo: 4K all day, huh?
John: I’ll start collecting movies.
Nathan: Imagine the 4K snap chats you could send with that.
John: I can’t. I can’t really imagine that.
Leo: 4K snap chats, that’s an intriguing idea.
John: Yeah, 4K video would be great.
Nathan: We could play some Halo online.
John: Now you’re talking.
Leo: Yeah, Actually speaking of Wired, I didn’t see this, but the Wired threat level blog explained where the security blog in the IPhone came from.
Nathan: Yeah, Kevin Paulsen. He knows his stuff.
Leo: Kevin is great. I’ve known Kevin since the bad old days. But he says it was a single go to in the code that was wrong.
John: No it wasn’t wrong. The NSA put it in there right after Apple signed up. You look at the prism chart, right after you see Apple on that thing, that’s when this ‘Go To’ showed up.
Nathan: Okay, so if this is an NSA planted exploit, as you’re alleging, or whatever.
John: Yeah, I’m alleging, exactly.
Nathan: Then why are they fixing it? Why would the NSA allow them to patch it?
John: Well if somebody found it and said, “Hey.” They’ll say, “Oh God, we’ve got to fix it.” They’ll put it back in.
Nathan: Somewhere else.
John: Somewhere else. It’s ‘go to’ you know, move it over here. It’s essentially by pass…
Leo: So what’s interesting is this source code is published.
Nathan: It is.
Leo: I don’t know if it’s because it’s part of Darwin and its part of their open source, or for whatever reason. But they did publish the source code, which means, unfortunately, that somebody could come along like Adam Langley, who works at Google, could say, “ This Error statement, it goes… there’s two go to fail lines in here.” So what happens is it…this is the kind of thing, if you were in the NSA, is exactly how you would modify this code.
John: Oh yeah, it’s easy.
Leo: So the reason is, so that it never gets to the 3rd condition.
Nathan: It can’t!
Leo: Because it goes to fail immediately. So it’s a typo or it’s a kind of thing if you really wanted to hack the code, you might just add it.
Nathan: It was interesting though, in that story, Langley defends Apple and says, well this is probably just a mistake and I’d feel really bad if I was that guy, or something kind of like that. I thought it was kind of interesting that Google was like sticking up for Apple a little bit here.
Leo: Well, if you’re a programmer, you look at that and you go, “oh crap!”
John: Well ‘go to’s to begin with! I mean, come on!
Leo: For the grace of God, go I. There is now a hashtag, Gotofail. If you got a little spare time, you want to browse through twitter, you’ll see a little Gotofail. Our Nancy Grace moment. Mandatory.
Mark: I will through out there a quote that Apple gave me about a year ago for a story I did on SE Android, which is an NSA project that Google incorporated into the mainline Android code. Apple said, “Apple does not accept source code from any government agencies for any of our operating systems or other products.”
John: You don’t need much of a source code. You just put a ‘go to’ in there and you’re done!
Leo: I just should point out, there is a site you can try this, gotofail.com, where you can test to see if their certificate is valid. You could provide, as the man in the middle, an invalid certificate and still set up an SSL conversation, that’s how you would attack it. I am using Safari and the latest version of Maveraks and you can see, ‘Your browser is vulnerable.’ This is gotofail.com. ‘Patch as soon as possible.’ There is no patch yet, out.
Nathan: They’re working on it.
Leo: Any minute.
John: It’s not as though anything you’re doing is nefarious.
Leo: No. Anyway.
John: They just figure out where you are at any given time in case they have to.
Leo: Windows 8 designer explains why Windows 8 is so bad. Are you curious?
John: I am!
Nathan: I guess that’s a way of paraphrasing what he said.
Leo: This is Jacob Miller who is a US designer for Microsoft. In a Reddit conversation he says, “ A metro was created for casual users, first and foremost. Our hands were bound.” He says.
John: Why? Who bound them?
Leo: It’s a sex thing? And our users were… He compares Windows 8 to a rented tuxedo coat. Okay, now bear with me here. Designed to fit a variety of people but not tailored to any one specific customer.
John: Ill-fitting is the word that you are looking for.
Leo: Ill-fitting. So Windows had to be simple enough for casual users. Because that’s what they’re trying to do is attract casual users. I don’t know why.
John: Why? There’s none left!
Leo: Right. But can’t turn off power users. As a result many features were cut on the first go around and that, according to Miller, led to Windows 8 split personality. Our hands were tied, our users were annoyed with their rented jackets. So what did we do? We separated the users into two groups, casual, wear maybe like a turtle neck, and power.
Nathan: Which is metro and desktop.
Leo: Right. So we made two separate play grounds for that. All the casual users would have their own new and shiny place to look at pictures of cats. Metro, this is him. The power users would then have free reign of their native domain, the desktop. Why was metro the default? Because casual users are very inquisitive. So if we didn’t make it front and center they’d never find it.
John: Which is why classic shell is so great, by the way.
Leo: By the way, this is why Windows 8 is so bad. “Now that the casual users are aware of their new pasture,” says Miller, “We can start tailoring.”
John: Oh please! What is this… our hands were bound. Name names!
Nathan: Well I mean, just look at the company. Look at the way it’s structured. Look at the whole one Microsoft movement that was put in place by Steve Ballmer. The whole entire push from Microsoft, saying, “Windows one operating system on both your desktop, your laptop, and your mobile devices, your tablets. The entire company bought into this. Anybody that was actually involved in making decisions there, Ballmer all the way down. These are the guys making that push. And that is a really different, kind of philosophical difference on how to view computing. Apple says, you have a desktop operating system and then you have a mobile one for your phone or tablet. Windows says you have one operating system for your tablet and your…
John: Well a single user experience is what they were working on and it’s…
John: It’s idiotic. Do they think people are so stupid that they can’t have a phone that acts a little differently than their desktop, so everything has to look exactly the same? “Oh look! My desktop is exactly like my phone! That’s great!” Who thinks like that?
Leo: Yeah, but it’s kind of confusing because it doesn’t run the same software. So you’ve got….
John: Right, exactly.
Nathan: But it looks the same, behaves the same.
Leo: So Microsoft confirmed this guy does work for him, they wouldn’t say what he does. There’s some speculation that he was just a nobody….
Nathan: Nobody. (Laughs)
Leo: Except what he says, is exactly right, makes perfect sense. That’s what you got and that’s exactly why you got it. I mean, if he’s a hoo ha or not but…
Nathan: I mean, if he’s not a UX designer and he reports to be one on Reddit, I wonder how long he’d remain a Microsoft employee.
Leo: Our show today is brought to you by Gazelle, if you ‘ve got old gadgets, maybe you’ve got an old Windows phone that you would like to unload?
Mark: Gear One.
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John: Even a Newton?
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Leo: The new malware is called the “THE MOON”. This is a nasty piece of malware, we talked about it on Security Now this week. It would allow a hacker to gain control of your computer, your network remotely. Linksys said, it only affects only a few of our routers, however it turns out it affects pretty much every Linux router built. Belkin now owns Linksys and they confirm the exploit that you should turn off remote management access that is turned off by default, you should turn that off in every router, unless you want to manage your router from the office or something, I can’t think why you would want that. But this is a fairly serious defect, you know routers are full of bugs and because it’s firmware, it’s not patched very often.
John: You know there is the untold story that was never written up by anybody but it happened with me and my Sonic.net connection. You know that exploit, that this French guy wrote about DSL modems being hackable. They were all hacked, almost all of them in the country, and it didn’t show up, necessarily, that was obvious. But we tried to use it for the podcasts, but we were having all kinds of problems with it.
Leo: Of course your router had been hacked.
John: The routers all had been hacked or most of them. Yes.
Leo: Hacked to what end did you give them access to your network?
John: No you could actually access the network and spam without the computer through the router and so most of the DSL routers were compromised, as far as I could tell it took them over a week to get the pace-moders back online working right. They gave me a special IP Address so that I could devoid the whole thing. But these things, these sorts of things are going on constantly and these routers I think are carelessly written.
Leo: Poorly written and we’ve seen a lot of malware lately, and one of the things that is happening is because Microsoft has done a pretty good job of patching Windows. It’s no longer the automatic updates, it’s no longer there as people have got more aware, no longer the vector that used to be so malware are looking at other avenues. They are infecting third party software like Flash and Java and looking at things like routers, and you know there is no software that has been written that’s not got some flaws in it right? A couple “go to fails”, and it is just what happens, if you are using a router you should certainly update the firmware. I would say that if you are using a router, buy a router that is compatible with DDWRT and install it because it is an open source firmware that is, has always been much more reliable much better and hasn’t had the problems the commercial router firmware has. Mark Milian thank-you for being here, appreciate it, Bloomberg’s in this week you’re covering the environment, the global world.
(Some fooling around then, Leo thanks Nathan, and says:)
Leo: Congratulations on the new gig, Wall Street Journal’s doing a great job, its good you got rid of that stuffy old guy with the goatee - -- he was boring. Its go to WSJD.com and great tech coverage, much better than the Yahoo tech page…….
John: Is there any tech on that page?
Leo: Yes if you can figure it out. I like David he’s a friend, but boy they are trying to be they’re aiming at people that don’t care about tech, which is the mistake that everybody, the Tech TV has started doing that. They interviewed Kenny Rogers,” What’s on your iPad Kenny.
John: That’s bad.
Leo: It’s not good.
John: People that are not interested in tech are not going to read a tech page no matter what you do.
Leo: I agree but see this is what I like about WSJD, it’s harder to say than like a radio station. Besides it’s unabashedly geeky.
Nathan: We have a good mix of consumer friendly stuff, some business analysis and some breaking news and some features…………..
Leo: What happened to “WhatsApp” which was out for almost three almost four hours. Yesterday, was it a DDos……….
Nathan: Something like that. I don’ think that it is really very clear.
Leo: I think that it was a DDos, some snotty script kiddy…….
Nathan: Hopefully Facebook are going to help him out, they want 19 billion dollars is what there are going to want, to……………
Leo: Until that point, super reliable.
Mark: There must have been a huge uptake based on all the attention everyone, was giving it…………..
Nathan: New folks downloading their apps, it could be, was more than what they could handle.
Leo: Two hundred and ten minutes down though.
John: If they had been with Square Space it wouldn’t have been a problem.
Leo: Somebody told me that they had 99.9% uptime, up to that point, have there been security flaws.
Mark: Up to date, up to that point. They have not been known to be that reliable (all participants talking over each other), but there have been security flaws…..
Leo: I remember just last week four Android malware applications, which have since been removed from the Playstore so you don’t have to worry about them. What they did was they signed you up for paid text messaging, an expensive, expensive paid text messaging service, where you get a text for a buck 1.50 for message, every three minutes and it comes out on your phone bill. The way they did it is because they need your phone number. It turn out that WhatsApp puts your phone number in the clear, in the data in the What Apps application. They were just pulling the phone number from Whats App.
John: Oh, fantastic!
Leo: What’s this guys phone number, let us ask WhatsApp knows let us ask it?
Mark: This was actually a scam from an organized Cyber Crime Base in Russia. Wracked up huge amounts of profits, they were targeting expensive text messaging scams.
Leo: It’s the Russians. It’s the Russians. When they are not busy fixing the Olympics.
John: You, were done by the skater.
John: That’s pretty bad.
Leo: Who has the most medals in the Olympics this year- The Russians……….
John: I thought we would have ended up with most of them?
(more talking over each other)
Leo: Don’t you notice that is the problem with this stuff. You know that you have to formulate the query, inevitably if you just launch into it you will get it all screwed up.
John: Yes, so it’s a waste of everybody’s time.
Leo: The most likely problem I don’t know this stuff that you have pulled out. (more talking over each other) What do I get, “How to ask questions from the smart way?”
John: Try it again.
Mark: Russian got thirteen gold medals at number one, Norway was number two, in total 33 gold medals.
John: What about us?
Mark: We were fourth place with 28 total, actually we were on second place on total medals, we were on fourth place on gold medals.
Leo: Vladimir Sputin looks good on our horse spear back?
Mark: But didn’t this happen in Beijing, two years ago when they won,…….
John: The Chinese………
Mark: Yes the Chinese!
Nathan: Wasn’t there something to be said, like you know the boost that would give you would get for performing in front of your own country, and doing it at home, (More talking over each other)
Leo: Yes the famous second man syndrome.
John: Twelfth Man.
Leo: In figure skating it is just you and the second man, that’s all. In figure skating there is not eleven men on the field.
John: Well you are outdrawing everybody and I was……
Leo: Hey you know what I have got to be back here at 11.30, do you mind can I wrap this up?
John: I am waiting. That’s what I have been sitting here waiting for. I would have been gone by now.
Leo: John C Dvorak is at the…
John: ChannelDvorak.com and the No AgendaShow.com, NoAgendaNation.com
And if you want buy something like goods and services…………..
Leo: Do you sell crap………..
John: You didn’t do the German voice come on……
Leo: I am saving it, I would like my Audi back though,
John: Oh by the way where is this Audi, there is that big talk about oh you have got an Audi, I have never seen this car.
Leo: (In German Accent) I was driving in Bodega Bay, I have a picture of it, it had a beautiful Google map of me in the Bay.
Mark: Which Audi did you get?
Leo: I got the AA8,
John: It was a 125,000 dollars that car
Leo: I was told the bigger the number the better the car.
John: Well you should have bought the A9
Leo: They don’t make the A9, I asked.
John: You did ask but with some more cash,
Leo: I said, Fritz I wish to have the 9. He said, ‘’We do not make a 9.”
John: Should have gone straight for the RA.
Leo: It’s too much car for me.
John: He actually tried to get an A8 with a 6 in it.
Leo: So here I am driving down the street in Petaluma, although it looks like I am in Bodega Bay, so I bought it through the Audi dealer, and he says we know there is a problem, but we cannot fix it. So I said what are you talking about?
John: That is going to be a big problem. So that is going to be in the Bay.
Leo: So then I tweeted, I Google Plused it, I used social media, and rattled some cages and they guy called me that I just got a call from Audi America, that they wish me to fix your car. So they have fixed it.
John: The squeaky wheel.
Leo: The squeaky wheel gets the grease!
John: By the way they have done something nasty to that car now. The guy gets a call from Head Quarters, he gets chewed out and you are going to have something in the car that stinks like a fish!
Leo: I have been cooking my fish in there. I have the saurkraut curing in the glove compartment. Ladies and Gentlemen we do this show and sometimes we wish we hadn’t. But we do this show every Sunday afternoon 3pm Pacific time and 6pm Eastern time, 23.00 UCT, please join us live!