This Week in Tech 527

Leo Laporte: It's time for TWiT: This Week in Tech. What a show we have! Talk about brain power. Ben Thompson from Stratechery, Ed Bott from ZD Net, Rene Ritchie from iMore, and we are going to disect bit by bit everything Apple announced on Wednesday, what it all means, we might even talk about Twitter, and yes, John Macafee is running for president. It's all coming up next: on TWiT. 

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Leo: This is TWiT, This Week in Tech, episode 527, recorded Sunday September 13, 2015.

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It's time for TWiT, This Week in Tech, the show where we cover the week's tech news. Big show today! Great studio audience. Thank you all for being here. This is going to be a lot of fun. It's going to be a version of Computer Crossfire. On the left, Ed Bott, joining us from ZD Net. 

Ed Bott: Always happy to be on the left, Leo. 

Leo: Good friend. Always welcome to the show. On the right, Rene Ritchie, from, he hosts many show on iMore and also hosts MacBreak weekly. Great to see you, Rene. You're back!

Rene Ritchie: Absolutely, I'm back in air conditioned Montreal and away from your heat wave. 

Leo: And all the way from Taiwan, Ben Thompson of Stratechery. Great to have you, Ben.

Ben Thompson: Great to be here!

Leo: Early morning. 

Ben: I'm this weird middle thing. I was in San Francisco last week. While there, I tried to stay on Taiwan time, and I halfway succeeded. I've been in halfway time. 

Rene: Ben and I were at a Japanese whiskey bar until very late at night in San Francisco, so I don't know how he's doing this today.

Leo: What fun! That's awesome. I think everybody who tuned in today will know most of the conversation will be about Apple's event. Although John McAfee is running for president and I think there is something to be said there, we'll talk about that though a little bit later. You were at the Apple event, Ben, I take it. That's why you were in the bay area. 

Ben: It turned out I had something else going on. It's hard to justify flying over for the Apple event, but it turned out I had two events in one week so it worked out perfectly. So Yes, I was there.

Leo: It's true you can watch it on a stream. Thank you Apple for streaming. I know Rene, you were there. The real advantage of going is the hands-on, because that's the only way you can touch this new stuff. Before the event, we talked about this on MacBreak Weekly, there was some discord in the Apple press community. There were those like John MIskowchi of Buzzfeed and Mark German of 9 to 5 Mac who said they were going to announce an iPad. Then those like John Gruber who said they can't possibly announce an iPad, the event would be too long. They were both long. The event was too long and they announced the iPad, almost two and a half hours. They were both Right! I was shocked. Normally Apple begins these events with a discussion of sales, how the stores are doing, how many people use iPhones. We knew it had to be an iPhone event. They've got to announce a new iPhone, but they buried that at the back. They opened with Watch 2.0 and weirdly these B And D band. 

Ben: I think it's called the double Tour.

Leo: Double Tour. That wasn't One Direction, it was One Republic. I'm sorry. Is there a distinction?

Rene: One's a boy band and one's a boy band.

Leo: That's the problem. But Harry is in One Direction, not One Republic.

Ben: If it had been One Direction, that would have been more humorous, because one of the rumors was that Taylor swift was going to perform, so had Harry Styles shown up... I'm showing way too much familiarity with this.

Leo: I can't believe you know this. I can't believe I know this. 

Ben: I got to stay in touch with what's going on.

Leo: so they talked about the watch, then they read right to the iPad pro. There wasn't anything in these announcements that we didn't already know from the rumors. 

Rene: What to me isn't always the interesting thing. It's how and why that's the interesting thing. iPad pro has been in the works for years and Apple TV has been in the works for years. What they choose to ship and the rationale behind it is what makes the event interesting to me. 

Ben: That's the challenge. That's why Gruber was suspicious of the Timwave app. Tim Cook said the biggest news of iPad is that Gruber was wrong. I think the event as a production was quite good--one of the better ones Apple has done in quite a while, despite the fact that there was so much in there. It was quite tight. What was missing was one of my favorite post-job keynotes was the post-Jobs iPhone 5S keynote and 5C. This is when Apple was a low cost phone. Apple came on talking about the iTunes Music festival, had this highly produced video that was really compelling. Basically, if you stepped back and looked at the presentation as a whole, Apple was saying they weren't going to compete on price, they were competing on delivering an experience that covers all these things. In that context, it made phone delivery much more compelling. That's what gets lost. There was no real context around a lot of this stuff.

Leo: So what you're saying is subtext is what's important in these events.

Ben: Some sort of text.

Leo: What is the subtext of Wednesday's announcement?

Ben: If anything it was we're firing from all cylinders from a new product perspective. The sheer amount of stuff that was introduced was overwhelming in some respects. The sort of big picture where does this fit in what we're doing and what we care about, that was by necessity absent.

Leo: It's funny, because a couple of audiences for any Apple event. There's us, the over-involved Apple press, there is the person who buys Apple stuff and wants to know what the next thing is so they can decide whether to buy it, and then there's the rest of the world. I was in New York City. I felt terrible. First Apple event I've missed in a long time. I'm looking around, I'm in a cab. Nobody is listening to the Apple event on the radio. Nobody is taking any notice of it at all. They're living their life. It's the most important day of the year and they don't seem to know! 

Ben: That's why the context is important. The biggest audience is journalists and now that it's streaming that's expanded. This is their real chance to shape the messaging around their products and what they do. That's something they didn't take advantage of. Maybe part of it is that it's streamed now. With 40 million or something like that, maybe it wasn't your cab driver, but we don't need to do MacWorld because we have stores argument whether you buy it or not. 

Rene: There's another issue here too, and I think it's what threw John. Most years they have two events. They have the iPhone Plus something event and then the iPad and Mac event. Once it was decided they weren't going to have the October event, that this was going to be the only event in the fall, then everything that's ready has to fire and everything that's not stage worthy gets dropped in a press release. The context of this is not one over-arching thing like music and here's all the stuff you can do with music, but these are all the products you're announcing this year and how are we going to put those into chapters in this event. 

Leo: Ed Bott, of course mostly you cover Windows. I'm looking at this and I can almost wear two hats. If I'm the cynic, I look at this and say it's Apple playing catch up. They're making a surface pro analogue, they're making an Apple TV which is a Nintendo Wii combined with a Fire TV. They're making phones that finally have 12 MP camera. There's one context you can look at it and say it's Apple playing catch up. There's nothing innovative here. There's a second context that we Apple enthusiasts embrace. We try to understand there's something more important... what's you're take on it overall? 

Ed: This looks to me like the coming out of a company that is in full maturity. Everything that they showed at the event was incremental and yet a positive improvement. They don't have to convince their market to go and buy stuff. They don't have to come out with magical and revolutionary things to expand the market right now. They already have a very loyal following. They already have product cycles that they've settled into nicely, so these are all the logical progressions of every single product that they have in their product line. Even the stuff is an extention of their desire to be identified as a luxury brand. They started that with the watch edition and they're starting to put other brands on top of it. This to me is not just a company that is secure in its products. Not just firing on all cylinders, but this steady almost monotonous pipeline of products that it doesn't have to sell hard anymore because its audience understands what they're going to do. 

Leo: If you look at the rhetoric, they're trying to keep it to people.... Look at the tagline for the iPhone 6S. The only thing that's changed is everything. It's not really true. 

Ed: All the S phones are said to be incremental upgrades. They're boring. Apple is making fun of themselves before anybody else can.

Leo: So they're making fun of themselves?

Ed: Yes. The idea was the iPhone 4S came out. Oh it's boring. It's the same. Apple is saying up front that we know it's the same. Everything else changed. It's an attempt to own that.

Leo: The only thing that's changed is everything is a lie. It looks the same. 

Ed: Different aluminum, different glass. It makes sense in context, Leo. 

Leo: I'm going to give you a chance to be fair, because I'm being unfair. Then on the Apple TV, the future of television. I think you can make a strong case that this is the past of television. Finally catching up to the present of television. 

Ed: It's entirely perspective based. If you look at Apple, they weren't the first at the phone or the iPad. They played catch up in both those areas. That's their game. Very rarely are they first to market. Usually they wait and try to see what's in the market, what paying people are expressing and then they carefully pick their shots. They waited a long time for the Apple TV because they were already in that market but doing things like the iPad pro with a keyboard, fairly or unfairly there's an old joke that Nokia invented everything in 1812 but nobody saw it. It's a similar thing. All these products have been introduced but Apple is trying to make it mainstream. 

Leo: I'm putting on a very contrarian hat here. There's one product Apple announced that I think is actually a world changer. I want to let you guys tease that out first. Ben, you were going to say something?

Ben: I was going to make the point that if you're reason to say that the success is the same is that it looks the same is kind of fall into the stereotype of design is just how it looks not how it works.

Leo: Everything has changed is clearly not true. 

Ben: When is Apple's marketing...?

Ed: Just to be clear, I think Apple is having a hard time in recent years coming up with good marketing taglines. Last year, wasn't it bigger than bigger? 

Leo: That's not so good either. 

Ed: There's two things that are going on here. Number one here is I can imagine the marketing meeting where somebody throws up their hands and says screw it. Is this the best we got? Fine. It's the best on the white board, let's use it. The other thing is they're doing a sort of time tested technique which is to take your weakness and make it a strength. Last year, their weakness was that years after the rest of the market were delivering phones the size people wanted, they finally delivered a phone, two phones that were big enough for people. So they come up with a slogan that says bigger than bigger. It's not just bigger. Yes it was, the major point was that it was bigger. This year the only thing that's changed is everything. Actually everything has changed a little bit and it's all a bit better and if you're in the market for a phone right now, this is your good choice from Apple. 

Ben: Ed, you're on fire. 

Leo: It's what Rene was saying. There's a certain sense of irony when you say the only thing that's changed is everything. There's an ironic... it's Jiu Jitsu. 

Ben: Maybe because I think in the financial world and business world, but I took it as a direct statement to Wall Street. The big concern around Apple and their stock right now is the common problem. The year over year comparisons to last year which was insane.

Leo: It's impossible to sustain that kind of growth. Eventually you run out of humans. 

Ben: That's the advantage of being an expensive device. Apple doesn't have a human problem. It's the...

Leo: Price problem. The affluent problem. 

Ben: In some respects, there's something to be said for that. When you say nothing has changed except everything, I think that's speaking to there's going to be a reason to buy or a reason to upgrade. What's interesting is the event was very compelling as a reason to upgrade. Only partially because of the feature perspective. I think the changes in carrier plans in the US is going to work hugely to Apple's benefit. The convention that Apple wins because of subsidies is mistaken. 

Leo: Even on stage Apple is still quoting prices that are subsidized prices. I think they were loath to say, start with 650 bucks. I bought the 6S Plus loaded. It was over 1000 dollars. 

Ben: When they first showed the slide, it only showed the category. Everyone in the journalist section was like snicker, snicker. But it followed right up, they listed all the carriers like per month prices. They did their own upgrade plan which is very interesting. Actually, I thought they were relatively transparent about it even though they could show...

Leo: They didn't want to tell you how much it is because it's outrageously expensive.

Ed: On the other hand, I went to Apple's site before the show today. 

Leo: They're sold out. 

Ed: I wanted to check some of the details of their financing. I wasn't exactly clear on how that was going to work. I was displeased to see that they're not quoting contract prices. They are quoting full retail prices. The monthly contract prices on the 24 month installment. There was an asterisk on those, but it's still 199, 299, 399 isn't honest. I didn't see that when they went to the website. 

Ben: To be fair, a big problem that I have with this whole Apple is going to lose once it's no longer subsidized is it's implicit that consumers are stupid argument here. I do think consumers are lazy. 

Leo: But they're not stupid. 

Ben: Exactly. I don't think anyone is... we'll see how it plays out. I don't think it's necessarily going to hurt Apple. If anything, the additional flexibility and freedom to upgrade sooner and more quickly is going to help them. There's lots of forces in the market in the iPhones favor right now. First and foremost of which is people are now buying their second or third Smart Phone. When you're buying your first Smart Phone, you didn't understand how important the Smartphone was to you. Right? 

Leo: Now you're willing to pay more, I agree. 

Ben: This is the most important device in your life. If there's one thing you're going to pay a premium for, makes sense that it's that thing. Yes, you say Leo that it's a lot. One, you're buying top of the line. Two, in the grand scheme of things, 1000 is a lot less than a BMW. 

Leo: But that's not what you should compare it to. You should compare it to Windows PC for 400 dollars. 

Ben: The point is absolute numbers matter as much as relative numbers. Yes, relatively speaking a phone is more expensive than...

Leo: A desktop computer.

Ben: The absolute premium of 400 dollars is less than... if you want to buy the single best car, the absolute premium is...

Leo: Apple's advantage is that they're the only ones who make the iPhone. Here's a Moto X which is a fabulous phone for 450 bucks. I think this is on the one hand, this is a difficult thing for Apple because there are phones of equal quality that are half as much, but they're not iPhones because only Apple can make an iPhone. 

Ben: I like the Moto phones, I think they're quite good. I would be happy to use one. But it is inferior. It's inferior if you prefer IOS, which a lot of people do. I think people are a little too casual to throw out it's equal. It's good enough. I get the good enough argument. You can have a fine and productive life with a Moto phone or a whole host of Android phones. That doesn't mean they're equal. The fact of the matter is in the consumer market, we see this in Industry after Industry, people are willing to pay a premium for a superior product. I think where tech got its head wrapped around an axel is tech grew up in the enterprise market. The enterprise market is very much a which one matters. The user experience isn't really a factor in enterprise buying. It just isn't. A lot of people in tech learned the wrong lessons from that. Now we're in a consumer market and actually we should be looking at other consumer markets to understand consumer behavior, not look at tech history.

Leo: I think it's no accident that Apple has focused on fashion because fashion is the number one consumer market where features are not the deciding factor. You price it based on some imaginary fashion. 

Rene: How it makes you feel, Leo. 

Leo: One thing I want to bring up about the low monthly payment plan that Apple pulls off, if you compare it to other plays from the carriers, all of them in the US do that now, it's fairly comparable. There is one little note that somebody brought up on the radio show that I wasn't aware of. You are required to activate this unlocked phone with one of the major carriers before you take it home. 

Ben: Or else you'd be giving Chinese smugglers an interest-free loan. 

Leo: So it's about Chinese smugglers.

Ben: Smugglers in general. It actually...

Leo: I would like to buy an unlocked phone. 

Ed: Global market. 

Leo: I have to pay AT&T, T Mobile, Sprint, or Verizon an activation fee to make this. That's a hidden cost. 

Rene: If you have a sim you could do it yourself. There's no fee or anything. I do it out of spite for the carriers. 

Leo: I understand the motivation. It's not that the carriers are saying hey Apple we want 50 bucks. They're worried about smuggling, global market across US border sales. This guy said hey I used straight talk. I want to buy an unlocked iPhone, I wanted to use their financing plan, I wanted to activate it. 

Rene: If you want to go to straight talk, there's other things you can do. This is an option that's provided for people.

Leo: iPhone activation with a national carrier. AT&T, T Mobile, Sprint, or Verizon. 

Rene: I don't know if they have some pre phones in the US already. 

Leo: They do, but you can't take advantage of the iPhone upgrade program. 

Ed: You can't get the financing. That's the deal. That financing comes with Apple care. There's an intellectual loyalty to the carriers that says we're going to maintain our relationships with you by insisting on this activation clause. 

Leo: That's what I wondered about. Traditionally they've had their carriers by the short hairs, but now they're making you activate with one of the national carriers on this. 

Ben: I don't buy any argument that says the carriers make Apple do anything. Apple says jump and the carriers are like we're already up in the air do you want us to go higher? I think it's this smuggling thing. They want to limit to the US market. 

Leo: A smuggler isn't going to do the installment plan. 

Rene: Apple wants one program that goes everywhere and they don't want to have to negotiate with everys mall carrier and they dont' want...

Leo: All Apple has to do is say here an unlocked phone, not activated, not associated with any carrier, you're going to pay us 32 bucks a month, we're going to work this out with a bank, because you have to do that. 

Ben: The pricing is pretty aggressive for the upgrade offer. Apple, if you add up the cost, it's the equivalent of buying it up front. 

Leo: It's like a 0% loan. 

Ben: Exactly, which is interesting because if you contemplate the cost and money, you're getting a better deal by doing the upgrade plan. Given that, I think there's no premium in there to justify any additional risks that's necessary. I think to Rene's point, it's the first year. It will be interesting to see how it actually plays out in stores. The last thing the stores need is people ahving 30 minute appointments to do stuff. It's already a mess as it is. I'm interested to see how it goes next year. Are people on the upgrade plan going to be able to get one first day still. How is it going to go down? How is it going to be organized? I think there's a lot of unknowns about this. I don't think it changes the fact that it's a very interesting development. It's moving Apple into being two things. One, there's a lot more money to be made. Two, it's like you're subscribing to the iPhone. Once you are on this upgrade plan, it's very difficult to see you not buying an iPhone. 

Leo: No. You're in. You're all in. 

Ben: This is like the lock in of all lock ins.

Rene: They get to re-sell the old phone, which is better than a lot of markets.

Leo: They'll probably recover a lot of that money, absolutely. Two hours in. The ordering starts at 12:01 AM pacific time. By 2 AM, I'm looking at a website called iPhone-inventory at, they went out. Two hours in, the iPhone 6 Plus was out of stock. 3 to 4 weeks delivery time! You can get the little one, but everybody is getting the big one. On the few that have delays on the little one, it's the rose.

Ben: I mentioned that if the proportions didn't shift much to the plus. the 6 was still much bigger than the Plus by a significant margin.

Leo: What's missing here is we don't know what the availability is. 

Rene: There's a popular misconception that big phones were popular before the iPHone. They weren't. Not in North America. More people were still buying iPhones and a lot of the bigger phones combined. I think the iPhone 6 and 6 Plus began to shift. Apple didn't invent the big phone but they mainstreamed it. 

Ben: I disagree with you. 

Rene: Your side of the world they were popular. They weren't popular in North America. 

Ben: Right, but people made this argument a lot that Apple should make a big iPhone. People wanted big iPhones. It happened to be in some markets that people wanted an iPhone more than they wanted a big phone. LIke you said, in Asia, it was not even close.

Leo: Look at iPhone sales in China. Two hours in on the pre-order. 2 to 3 week delay for the iPhone 6. Sold out in six hours. That is very good news for Apple, which had to reassure the markets that despite economic rows in China that there was still a strong market. Right, Ben? This is good news for Apple. 

Ben: Sure. I think the China question is interesting because Apple is more exposed to China than any other tech company. That said, the head room for Apple in China is massive and there is even with the current slow down, the number of people moving into a middle class level of income, which, the iPhone is the thing to get once you can. Basically more than the population of the United States. Even if there is a slow down, there's so much slack in the system to take that on. I think Apple will probably be fine. It's a valid reason to be concerned, absolutely. It is the growth market, but that said, I think that Cook's statement, which was odd for lots of reasons. 

Leo: I remember going to China. Small village, was an agrarian village. They made all their money on pears or something. Going into a house. Giant screen TV. Each year there is a new consumer product that is the thing for aspirational middle class to have. It was air conditioners one year. it was big screen TVs. This is culturally really important to understand. I take it, it's the iPhone that is the status symbol for the upwardly mobile in China. This year, anyway. 

Ben: There's certainly the whole luxury component and stuff like that. That's almost a higher level up. 

Leo: This is the aspiring middle class. 

Ben: This is, the iPhone, you can get an iPhone for 650 dollars, you can get the iPhone 5S for 450 dollars. China it's a little more. The point is, you can have the best possible phone for not that much money. A Louis Batton bag starts off at 1500 dollars? From a status perspective, those are in the same class. The fact that the iPhone is more expensive than an Android phone, but from an absolute cost basis, it's not that much. In a country like China, where all of the things you get first when you arrive, the first thing you're going to get is a Louis Vuitton wallet. It was a small little thing. It would be 200 bucks. It's a running joke going. That was always the first luxury item anyone got. Now it's the iPhone. It's not like somebody is coming in with an iPhone above it. Louis Vuitton got over sold. People got sick of it. Now it moved up. What's coming in above the iPhone? You're not going to replace the iPhone. It's a cheaper product. It had this exclusive hold on the status phone market and that's not going anywhere. 

Leo: You have to get the blinged-out phone. 

Ben: You look like an idiot. 

Leo: Where was it? there was a Vertu phone. Was it in Vegas? It's weird. 

Ben: They're in every airport in Asia. I love checking them out. They're better now because they do have modern versions of Android as opposed to 2 or 3 years ago when they're still running Symbian. So they're actually functional and usable now. Still ridiculous.

Leo: They're luxury mobile phones with exquisite materials and cutting edge technology. I don't think so. Signature for Bently. I've got a Bently phone. Sure it's running symbian. So what? As technologists we mock this. That's the point here. This isn't about the best technology. Even with the iPhone. It's about status. 

Ed: It's very clear that they had a segment of the market that's not 1%, it's the 10%. Apple doesn't want buyers who are price sensitive. They don't want buyers who are going to... that's an overgeneralization. They're offering for the price sensitive buyer is you can have our phone from two years ago at a discount. The one that is being offered today, the new one, comes at a premium and yes a 400 dollar absolute premium might not seem like a lot if you're in the top 10% of the Chinese economy, or the United States economy for that matter, but if you're in the remaining 90% ofthe economy, particularly if you're in the bottom 50% of the economy then you're going to be thinking long and hard about those absolute amounts because they do matter. 

Leo: Why does Apple still have the 5 whatever?

Rene: They don't want to make crappy cheap phones. 

Leo: They want to offer something at that price? Why do they care? 

Ben: One of the pieces of news I found most interesting is the discontinuation of the 5C. I think, much as people want to protest, the 5C was a failure, and the reason it was a failure is interesting. The reason it was a failure is because it looked at first sight like a cheaper iPhone and the difference is when you buy a 5S today, you don't know if it happens to be a two year old phone or a one year old phone. It's ideal from a status perspective to have the most current model. You either have an iPhone or you don't. The thing about the 5C is it was never really an iPhone for this specific angle of things. From day one, it was not the flagship iPhone. It's interesting it was discontinued. I thought they might keep it and drive down prices with that model specifically, but I think they've decided and rightly so that this value of status is worth more than whatever incremental new customers you can get by having a 350 phone. You can certainly see both arguments for it. 

Leo: Half hour into the conversation and we haven't mentioned specs. We haven't mentioned features. That's how Apple wants it, really. You're right. You either have an iPhone or you don't. Let's take a break. I want to talk about what I think was a revolutionary new product. We can talk about this 3D touch, rebranded force touch. Whether it works or not. You guys have played with it, you can tell me. Apple TV, lot of stuff to come. Maybe we'll squeeze in a Google story or a Twitter story. Why was Microsoft on the stage at the Apple event? Shades of Bill Gates towering over Steve Jobs. But first, let's talk about Wealth. WealthFront. Many of you are saving for your future, whether it's to buy a house, to retire, how are you investing your money for the long term? The money you're putting aside. You don't want to put it in a savings account, you want it to grow, but do you have the time to manage it? Are you going to pay an advisor to manage it? Traditional advisors charge huge fees. one to 3 percent of the money you have under management. Not to mention additional fees for transactions. It starts to add up. Every one of those things is eating away at your savings. Wealth front is so cool. It's a new way to do it. You don't have to worry about it. Put your investments on auto pilot. It's done programatically. Wealthfront makes it easy and affordable for anyone to access world class long term investment management using solid principles. You can start with as little as 500 right now. Here's the best part. 1/4 of 1% a year. That's 25 basis points. There are never any comissions, there are no hidden fees. No additional charges for WealthFront services. It's really amazing. The Wealthfront team includes the smartest thinkers about Wall Street, including the authors of two seminal books. Walk down wall street. Winning the Loser's Game. These are guys who understand how Wall Street works, understand the mistakes that normal people make, and they've built this into this sophisticated software that runs Wealthfront. Wealthfront is completely transparent. You can view your accounts in one place, whether it's personal, joint, or retirement. You can have all three. You can see every trade they make on your behalf on the dashboard. Their mobile app. They're using sophisticated strategies that are very difficult for others to do. Things like Tax Lost harvesting and direct income that maximize after tax returns. They lower your tax bell and increase your returns. No wonder WealthFront has grown 20 times bigger in the last two years. Now 2.6 billion dollars in client assets, that number was 2.4 in the copy I'm reading here. They're growing fast. It's incredible. I want you to try it! Go to, get your free personalized investment portfolio. You'll answer some questions about your time frame, your risk tolerance, things like that. They'll show you what their investment portfolio would look like for you. You'll see the allocations they recommend. That's yours for free. Just for TWiT listeners, if you sign up to invest, it starts at 500 bucks, that's the minimum investment. You can go all the way up to 15,000 and there's no fee at all. Zero. After that, .25%. It's very smart. This is technology making a huge difference. Go to wealthfront.comtwit. Get your personalized portfolio. Read up on it. Don't just take my word for it. Once you understand what they're doing, I think you'll be very impressed. It's people like us, it's the geeks who get it. For compliance purposes, I have to tell you wealthfront incorporated is an SEC registered investment advisor. Brokerage services are offered through wealthfront brokerage corporation. This is not a solicitation to buy or sell securities. Investing in securities involves risks. There is the possibility of losing money. Past performance is no guarantee of future results. Please visit to read their full disclosure. What a great show. I've been looking forward to this all week. I didn't get to talk during the event so I have all three ideas churning in my mind. Who better than Ed Bott from ZD Net, Rene Ritchie from, and Stratechery's brilliant analyst, Ben Thompson. All Talking about what's going on. Whether you're an IOS, iPhone, Android user, that's not the point. This is the technology industry. One of the real movers in the Industry. I look at this as an event and I think I wish they wouldn't say these superlatives. It sounds too much like a marketing event. It's important for us as analysts to burn of the marketing hype because that's bogus and understand what Apple is doing. I think we've got a great team for doing that. I thought we'd have a little battle between Ed Bott and Ben Thompson right now. Rene, you know Brazilian Ju Jitsu, so if you want to throw in, you can tag and get in there. 

Rene: Ben worked at Microsoft and Apple. He's the swing vote here. 

Leo: I thought, Ed Bott, I don't want to put words in your mouth, but especially at that crappy keyboard, this is a surface clone. The iPad pro. Do you feel that way, Ed? 

Ed: Not really. 

Leo: Shoot!

Ed: No, because if you go back to the original iPad launch, I'm pretty certain they showed a keyboard case for it in the first 20 minutes. 

Ben: They had a stand. They also demo-ed it. 

Ed: They thought the original iPad was going to be a Netbook killer. It turned out to be... the joke at the time was that people said the iPad was going to be a big iPhone that doesn't make phone calls, but it turned out that was completely true and it was a good thing for Apple and a good thing for people who bought the original iPad. That's exactly what they wanted. With the volume of iPad shipments going down, I think they're looking at the overall brand and value proposition of iPad and saying there are a lot of people who use this as a laptop replacement. I spend a lot of time in airports, Rene and Ben you do too. We see a lot of people with iPads with these weird ugly keyboard cases and they're trying to do things with them. Apple is just responding to the market here. Now, to me the disconnect with the iPad Pro is not that it's a surface clone but that they're trying to appeal in terms of size and screen quality to creative professionals. But creative professionals want full Photoshop. They want full final cut pro. They want full premier. The limited capabilities of the apps in the iPad pro are going to be the limiting factor for it in terms of acceptance in the first year, I think. 

Leo: I almost wish they hadn't released the keyboard. I think that muddies the water. The iPad pro is all about the pencil and the screen. 

Rene: My background is in design. I worked ten years in design using tablets every day, and I grew up on Photoshop, it's still muscle memory for me. I actually liked the way the iPad pro worked with the pencil a lot. It's the best stylus I ever used. Way better than any tablet I've ever used because the response rate is great. They're doing predictive algorithms that you can watch self-correct. They stay up with you, you can scribble, you can cross hatch, you can tilt the thing. I tried procreate. Photoshop has never known who it's for. Previously it was for photographers, now it's supposed to be for UI designers. Different tools for the righr job. That's what the iPad felt like when I looked at the 3D different apps and the drawing apps. It really looked like you could purpose build something that was really good. I am a final cute pro user. I don't know how it's going to translate to iMovie even with simultaneous dreams or whatever. I don't know how I'll be able to cut and do things as precisely as I want. When I get one, I'll give it a try. For a lot of people, I wanted to buy a surface to sit there and draw with it because Apple didn't offer that functionality but there's nothing else about it that I was going to use. Now I have that built into an iPad. Conversely there are exactly those people that we've been talking about who are using keyboards and Apple, because of the MacBook has gotten really good at making super low profile keyboards. I tried it out for a while and it feelsl like using a MacBook keyboard. If you are that productivity person or the creative person, they've got the tool that fits whatever you want to do. 

Ben: I have to disagree on the keyboard. I thought the keyboard was terrible. I thought it was much worse than the MacBook keyboard. I've only used it briefly. I think the service keyboard is better. For the record, it plugs into the side of the iPad and does power back and forth. That said, I have a few points. First off, I do reject that it's a surface rip off. The Surface is a PC with a touch layer that you can use. The iPad is a Touch OS from the ground up that you can put a keyboard on. If that sounds trivial, I think that it's trivial in a fundamental way. We talked before about the consumer market being different from the business market. The user experience has to be optimal for you to be successful. By extension, this hyper approach is not the optimal one. Some people like the surface. I'm not a fan. The reason I'm not a fan is because I think Windows is a PC operating system. I think the form of a laptop is better. It's more flexible. You can do more with it. How many people do you see using a surface without the keyboard. Barely anyone. That's a shortcoming. On the other hand, Leo, you're exactly right. I think that these two accessories signify two potential futures and markets for the iPad. The keyboard is the iPad as a PC replacement and in some respects it's better. It's simpler and easier. The App store. In other respects it's worse. I think the power and capability is worse. On the other hand, this pencil thing you nailed on the head. It's really good. As opposed to the surface or any other thing that uses a digitizer, you don't have that big gap between where you're drawing and the actual screen where you get this effect where you're actually using it. The response rate is incredible. By far the best I've ever seen. 

Leo: It looked incredible in the video.

Ben: By far the killer feature of the thing. To me what's so exciting about this, I don't use my iPad for anything but for WhatsApp. That's how I create illustrations for my blog. Basically I buy an iPad because there's one thing I can do on the iPad through 53 that I can't do on a PC. I can't do it on a phone. That is what the pencil leads to, is more applications that can only be done on an iPad. Alternatively maybe a 2000 dollar tablet connected to a PC which is going to be an inferior experience anyway. I'm much more excited about the pencil future than I am about the keyboard future.

Leo: My initial reaction, I'm watching this announcement. First of all, shocked that Apple led with it. There was the watch OS stuff, but the first big piece of hardware, and it shocked me when Tim Cook said let's talk iPad. Really. Looking at it, I felt like we were seeing a paradigm shift in computing. I think this is really important. This is the move from desktop, keyboard, and mouse computing from touch first computing. You make an excellent point in your article, by the way. The title tells us it says it all from products to platforms. The iPad is no longer a product. If Apple does this right, a new platform. You say and I think you're exactly right, that Apple has to adjust its App store policies if it's going to make this work. It's going to come down to software. I didn't get to play with it, but I'm gathering from those who did, that you look at something like iMovie or Garage band, Apple apps and it is not just any more than the iPad was a blown up iPhone. Something happens when you get to that size that it is a natural UI for certain categories of applications. It's a much more natural way to work. If appropriate applications are developed for this platform, it will really have us rethinking the way we use computers. Before the show, we probably should make a special out of it, we had Abby the developer of You Make. This app isn't out yet. He won't say, but apparently they've been working with Apple because this is very much what Apple wants for the iPad pro. 

Rene: It's terrific. 

Leo: I was playing with it. It's a 3D design program that you use the pencil and your fingers to design stuff. They showed me a car that's already been designed with this as beta testers. To me, I feel like the iPad pro is a new form of computing. 

Rene: Interface is different too. You can expose more interface on the iPad Pro and you can't even on the iPad air. It's almost like a 5K iMac. You can have extra stuff so you don't lose the usable area, you just gain utility. That was super impressive. 

Leo: It underscores the problem that was with Windows 8 and continues with Windows 10. Microsoft misunderstood what people wanted to use Windows for. That's a desktop OS. Trying to shoe horn touch into that is not the same. It's the same reason why OS 10 shouldn't have Touch stuck in there. Apple has two separate platforms, and I think this is a maturation of IOS that was unexpected and exciting.

Rene: The super interesting thing here Leo, is the way Apple is doing this. You can quarrel about how much OS X is like the other products, but you have backboard and front board, and now they're starting to differentiate the iPad. I still want them to go full out and make a unique version of Springboard just for the iPad, but they're doing things like Split screen and slide over. If you extend out into the future. I think you're right. As much as the MacBook is closer to an iPad than a mac, this is closer to a computer than an iPad beore it. There is an interesting space. 

Leo: This is like Minority report. You're all thinking about gesture based computing. It's very natural, you've got a screen, you touch the screen, you use a pencil. You're intimately connected with the stuff that you're doing. Ben, you make an interesting point. Whether this happens or not depends on what Apple does with the App store.

Ben: To your point, Leo, this was already possible on the iPad. I think your point is well made that these creative applications... the whole thing that is frustrating with this creation/perception debate is that creation is so often presumed to be text input, whereas what's exciting about the iPad is that it's arguably it's a superior input device for anything but text input because of its adaptability. It's not just the touch aspect, but it becomes the appropriate interface. 

Leo: I tell students to buy a chrome book. Don't buy an iPad. Students are crazy to buy an iPad. What they do is type.

Ben: I'm a huge ChromeBook fan. I think the ChromeBook plus iPhone combo is the best for the majority of people out there. 

Leo: There's a huge category of new applications. This video compares traditional cad software with using You Make to do the same kind of design thing. I think after you use this kind of thing for a while, you might say that mouse keyboard is the crappiest. 

Rene: I used to use it for design every day, and the speed in which they did the layout of a page on the iPad pro was amazing to me. I draw the box, make a big x, suddenly that's a graphic box. 

Leo: When you make a platform though, you really...

Ben: Look how quickly and easily we can enhance bad stereotypes. 

Ed: I mean we must not forget first of all the size and weight of this device is intimidating for a lot of people.

Leo: You're not going to put this in your purse.

Ed: The cost isn't intimidating for a lot of people. Yes it's less than a BMW.

Leo: It's less than a work station too. You're selling to people who use work stations. This is not. 

Ed: It's not a work station. It has some very nice graphics, but it only has 4 GB of ram, and my colleague Jason Purlow at wrote a very interesting article published today or last night lying out the case for this, and it really requites a lot of cloud power back end for a device like this to do its work.

Leo: Why is that?

Ed: There was a demo that they showed--- Because a lot of the things that they're showing off demand a whole bunch of data to be processed. 4 GB of Ram isn't a lot of workspace. Most creative professionals are working on machines that have 32 GB of ram on it, not 4. 

Leo: Yeah, because they're using heavy weight operating systems. 

Ed: It's not just operating systems. It's the size of the file, it's the size of the transforms that you're doing. This is a very interesting device, but it's very early. In some ways it's a piece of glass with very nice responsive capabilities that needs some serious processing power on the back end to really do its magic. You're not going to be looking at raw x rays on this thing all by itself. 

Leo: We were at a great meet up, by the way. Thanks to everybody who came up on Wednesday at New York City's rattle and Humbar. You've been there Ed, I'm sure with Mary Jo Foley. A guy came up and said I'm a neuro surgeon. He said I wasn't sure I was going to be able to make it because I have 8 patients that I'm monitoring right now. Was he using an iPad? Or was he using a laptop? He's monitoring 8 different patients at different hospitals. Radiology stuff this has happened. It's been outsourced to groups. 

Ed: Drinking while he's monitoring 8 patients?

Leo: I said aren't you worried? He said one guy now. I think he's going to be OK. I don't know exactly how this works, or what he's doing. He's got these graphs, these things, he's looking at them, while he's having a beer. 

Rene: They showed that on the watch, Leo. They showed heart rate monitoring on the watch.

Leo: No, this was a little more sophisticated than that. I mean these guys are hooked up to a lot of stuff. They’ve had neurosurgery I guess and they’re being monitored after the fact. I’m not sure what he’s doing. The point being there’s, yes ok, I agree with you, Ed. I think your colleague and you are exactly right. You need some – but isn’t this the era of the cloud? I don’t think that that’s—

Rene: Well there’s also the, there’s also local. I often you know, just pick up my iPad continuity off a document and work on it with fingers because that feels more natural to me and then go back to my Mac continuity. And then I continue when I want to use the mouse or the bigger storage. And I think we’re getting to a world where Google’s definitely made the cloud more seamless and I think Apple is making moving between devices more seamless as well.

Ben: So you think there’s lots of good in points that are kind of not necessarily—so one--

Leo: Fix this up. Fix us up, Ben. Re-write us. Edit us here.

Ben: Ed is exactly right that it is expensive and the iPad is at a very kind of fundamental perspective more expensive than the phone. Yet the 5—put it this way. The $500 iPad is more expensive than the $650 iPhone. And the reason it’s more expensive is because the iPad is an “and” purchase. You’re going to buy a phone regardless, right? So literally you had that Moto in your hand, right? It was $400?

Leo: Yea.

Ben: So in that world the iPhone is not a $650 phone, it’s a $250 phone. I mean because you’re paying a $250 premium to have an iPhone. In the case of an iPad you don’t necessarily need to have a tablet. So every dollar that the iPad costs is a dollar that you are electing to pay. And in that respect, the iPad is always a harder sale than the iPhone is. That said, I would disagree with you Ed, the quad capabilities isn’t an issue. I think that’s the way that computing is going and quite frankly Microsoft is a big leader in this respect where that makes sense where you have the local processing handle the local UI and you have that sort of interface. Now that’s kind of what the old net – not netbooks, the real netbooks, the Netgear like they were doing where you would have the pure terminal and everything—

Rene: The thin clients.

Ben: The thin clients, yea. That’s where they got wrong, right? They didn’t have enough, the user experience wasn’t good enough because they put too much in the cloud. But I think a hybrid approach, I don’t, I’m not objecting to that. What I think the key thing though that Ed did hit on with this being expensive is that the iPad is and even more so today than it ever was, especially with iPhones getting bigger and more capable, it is a niche device. And it will always be a niche device. And given that I don’t object to Apple releasing a more expensive, more souped-up, more powerful version, because that’s exactly how you should respond to being in a niche market. There’s 2 kinds of big strategies. One is a general purpose market, widespread where you want to reach as many people as possible, make it up in volume. The other one is the niche market where your goal is not volume, your goal is maximizing your revenue per consumer, or per buyer. And the iPad Pro does that. If you’re someone who actually uses an iPad for things that can only be done on an iPad, an iPad Pro is better, it’s more expensive, all of which is a good thing for everyone involved. And the issue, the worry, the concern for the iPad from my perspective is that the app makers for iPad are also going to be niche providers. And a niche provider like I said needs to maximize the revenue per consumer. And that’s the exact thing that the app store does not currently allow. The app store is all about being a volume play. It’s not about maximizing your revenue per your consumer over time. And that’s the big concern is Apple doesn’t have the business model I think to support the sort of apps that will make the iPad Pro a super powerful and compelling device. And to reach the potential that you laid out, Leo.

Leo: Surely they can flip a switch and say, “Well, we’re going to have trials. We’re going to have—“ you know, can’t they make that work?

Ed: It’s not a question of trials. It’s a question of these are apps, the amount of work and the amount of development effort that needs to go into these powerful apps that need to run for a limited market of people. Those apps need to be sold at $200, $300, $400 each.

Leo: Right.

Ed: Not $5 each. 

Leo: I mean they could be, but it’s an expectation thing right? I mean—

Rene: And the technology is pushing them in the wrong direction. Like Apple really wants universal apps because that’s, you know, it looks like an iPhone app but that’s also what’s filling up the Slide Over, and what’s filling up the very slim version of Slide View. And when you make that, you make a universal app, charge $50 on the iPad Pro but do you artificially restrict it against the iPhone? Because people aren’t going to pay $50 for an iPhone app? They’ve set up an incredible, not just Apple, we’ve decided we didn’t want to pay for things, Apple decided they don’t want to increase the value of the platform and developers have often raced to the bottom. And we’ve got the sum of all these compromises right now. And I agree with Ben.

Ben: The thing is, I don’t think any of you made that but I’m going to pretend that you did so I can push back against it. I’d push back against the intentional—

Rene: (Laughing) I’ll do it.

Ben: Pushing back.

Ed: NO, I’ll do it. That’s my job.

Ben: No a lot of people, a lot of people do state, and particularly in the Apple developer community, that this is inevitable. Because we’re in a world—and I’ve contributed to this because I wrote an article a couple of years ago explaining how software by definition has zero marginal value. Which means undifferentiated software will eventually cause zero dollars. Because, especially in a very competitive environment like the iPhone. And that’s true but the key word there is undifferentiated. Like if the case, if it was always the case that highly reputable content was zero marginal cost, could not be charged for it, then I’d be screwed. Like I sell text on the internet. It’s like the most competitive environment in the history of humanity. But it works because some number of people find it to be worth paying for. And the challenge for an app maker is there is no way to articulate your value. And because if you go in the app store and there is an app that costs $100 or $500 or $5,000 – by the way the app store limit is $9.99—you can’t demonstrate your value to consumers absent them buying it and like them contacting you separately for a refund and then doing this weird process. Like it’s a total mess. And this is why I think that things like trials are actually super important. Because they’re a way for differentiated apps to demonstrate their differentiation and to drive purchase. And so that fixes the revenue per consumer angle because now you can get more per customer. And this is way more important than Apple taking 30% or things like that that people focus on. 30% of a dollar isn’t very important. Like the big issue is that top line number. How much can you drive? And that’s why, and this is something that Microsoft understands. And this is, I’ve made the joke that the iPad be arguably better if Microsoft owned it because Microsoft is a platform company. They get that. They understand what developers need. They understand how to create the environment for developers to make money. And Microsoft—one of the key things, yea every time you go to a Microsoft developer conference, like they have the huge one every year, their sales conference or whatever, they always show the slide that shows the value of the total Windows ecosystem and how much Microsoft harvests. And they brag about the fact that, “Oh, of the total value of the Windows ecosystem, we keep 24%, or 27% of it.” And their point there is we’re invented in making a big pie for everyone. We’re not out to get all the money for ourselves. And Apple does the exact opposite. Apple is this pure, like hard core, like we’re going to commoditize our compliments. Which means that all the parts we don’t make money one we’re going to make them as cheap as possible. And in the short run that works. And it works on the iPhone. And it works on the iPhone because the iPhone, the most important apps are social networks or communication networks or things where we keep in touch. And those—

Ed: Or games.

Ben: And those have to be free. Well this is, the games point is interesting. Because games start out, it was an ok market. What set fire to the games market was Apple 1, enabling in-app purchase, and then 2, enabling in-app purchases for consumables. Which is where you can buy the same thing over and over again. And that, where you know, you can buy ten points or whatever. And that, that is what led to the games explosion on the iPhone because it’s not enough to just have all this amazing graphics capability. You also have to have a reason to invest the money to take advantage of that capability. Which means you have to have a business model that supports it. The iPhone and iOS does have that business model for games and it has a thriving games ecosystem as a result. The concern here is for other apps, for productivity type apps, especially ones that don’t have a service component—if you have a service component, you can charge a subscription and that kind of makes sense. But if you have a self-contained app, there’s no way 1, to demonstrate your value to get more money, and 2, there’s no upgrade pricing and no way to communicate with your current customers. You can’t extract more money from your same customers over time. It’s always easier to get money from the same customers than it is to find new ones. And that capability is just not simple at all on iOS. And Apple could unlock this. But I just feel they’re such a product focused company. And that’s to their benefit. That’s why they have a platform in the first place. Again, in the consumer market you win with a great product. You get a great product and then you have the right to be a platform. That’s Microsoft’s problem. They don’t have the product to become a platform in the consumer market. They don’t have the enterprise leverage anymore that they used to have. And Microsoft sitting on the side, this great platform company that doesn’t have a platform. And Apple is on this side, this great product company that has a platform they don’t seem to know what to do with. And it’s frustrating because it’s not like these developers will go to another tablet. There is no other tablet with customers with a demonstrated willingness to pay. Apple owns all those customers. And there’s all this class of apps, Leo, you’re so excited about the future of computing. So am I. But I’m also worried it’s going to never happen because the business conditions were never in place. Sorry that was a long rant.

Rene: What I’d like to see is from, what I’d really like to see from Apple is a vice-president of App Store that’s sort of analogous to what Angela Ahrendts is for retail. And someone whose only job is to wake up in the morning and decide how to make the App Store a tremendous product, as good a product as an iPhone or an iPad. Because right now App Store is bifurcated or even trifurcated. You have Craig Federighi’s org who makes all the frameworks. You have Phil Schiller’s org that does app review and evangelism. You have Eddie Cue’s org which does store management and editorial and runs the actual store. And without one person sort of making that a fantastic problem, sorry a fantastic product, you just have, again, the same thing where people aren’t always on the same page. And it shows. Like Ben’s favorite app Paper. They stopped charging money to make money off the pencil. Now Apple is making a pencil. And what are they going to make money on? And I love that app too. And I want that app to be here. I want to give developers money. I just want better ways of doing it.

Leo: Ed Bott, isn’t this kind of a problem that Microsoft solved with its unified app store and One Windows solution? Isn’t that what they’re addressing? Or is Microsoft going to have the same problem?

Ed: I think in a way. Both Apple and Microsoft are converging on the same point from different directions. Microsoft’s historical strength has been understanding price sensitive, efficiency sensitive business customers. Apple’s historical strength has been understanding non-price sensitive, very quality sensitive consumers. So they’re both trying to aim towards a point. Microsoft trying to get some traction in the consumer space which they’re getting maybe a little better at but not too, and Apple trying but only half-heartedly I think to get into the business and enterprise space because they realize that the margins there and the sell cycles are so long and so difficult that they almost, they almost, I think want to concede that market and say, “You know, we’re going to be happy playing in the high end here where the margins are high. And we’ll leave the enterprise to Microsoft.” It’s almost like it creates a world where sometime in the future Microsoft and Apple merge just to, you know, to sort of create the Venn diagram—

Leo: Meet in the middle, yea.

Ed: -- that has those customers working properly together.

Leo: I feel like Microsoft solved this somewhat with Office 365. This is a really good example of a way they monetized what was a huge cash cow, their number 2 product, by charging a subscription fee. And you get it free if you’ve paid that subscription fee on the iPad. And in fact they have a very nice Touch First version of the Office apps. Works quite well on the iPad. I think probably will work even better on the iPad Pro. But they get their money from that monthly subscription fee. Is—

Ed: But it’s almost unique. It’s—Office is historically this—it’s a legacy product that has survived and thrived. And there are very, very, very few things that you can put into the same class as it. Adobe has been trying to do the same thing with its Creative Cloud product.

Leo: I think the Creative Cloud’s done, I would guess has done well.

Ben: Adobe’s been very successful. And it’s actually one of the more I think underreported, underappreciated stories where that Adobe has completely set the revenue model.

Leo: I’m happy to pay for my Creative Cloud subscription. We have a number of them here. We have the high end subscriptions for the editors. I just have the photography one. $10 a month I get Photo Shop and Light Room. That’s a great deal for me. And I imagine I will get a free Light Room app. Maybe even a free Touch First Photo Shop app on the iPad Pro as a result.

Ben: The difference though, and I think Ed was driving at that, is a big reason why Adobe and Microsoft were able to pull this off is because they already have the established mind share.

Ed: Exactly.

Ben: And like Adobe said, “You’re switching to Creative Cloud whether you like it or not.” And basically everyone is so locked into Photo Shop that they had no choice to go against it. And there was a lot of wailing and gnashing of teeth and things like that. And if you’re a new developer, particularly on the iPad, the whole lure of the iPad, Leo, is that you can make an app on the iPad that you can’t make anywhere else. That’s the potential. And like, it’s harder to explain to consumers why you should pay a subscription fee for an app that’s limited to one device. Like they whole, the thing with Office is you can use it anywhere.

Leo: There’s no desktop market for that kind of thing, yea.

Ben: You can use it on the web, use it on your thing. All that sort of stuff.

Leo: How about cloud services? Can you charge for that?

Ben: Well I mean yes you can. So two things. 1, yes you can. But 2, a lot of apps don’t necessarily have a natural service component. Like Paper for example. They are building a cloud service. And they’re building a cloud service as far as I can tell primarily to monetize, not because the app actually needs a cloud service.

Leo: Right. They don’t need it.

Ben: But the thing that frustrates me about this argument is not that you guys are wrong. There are ways to monetize. The issue is I would like to stop with the let’s figure out how to overcome Apple’s limitations and let’s dwell on Apple’s limitations and stop making excuses for them and finding ways around them. The fact of the matter is, there’s no reason for Apple to not support stuff like this beyond as far as I can tell, and this is what was so ironic about Microsoft and Adobe being on stage, the fact that Apple never again wants to be held captive to an app developer. You go back to 1997 in MacWorld Boston and Steve Jobs stood on stage and talk about Microsoft and investing in the company. And that they’ll keep Office on there. The fact of the matter is at that point in time, Office mattered more to Mac users than the Mac did. And so did Photo Shop. And Jobs never forgot that. Jobs was right about the Flash stuff on some level, but—

Leo: Everything that’s happened since then was Apple’s attempt to say, “Never again.” They said, “Never again are we going to be beholden to Adobe.”

Ben: Exactly. Exactly. Or any app developer. And I’m convinced and I wrote this several years ago that Apple, so much of Apple’s behavior on developers is driven by this you know, never again. And you think about it like with Paper, they’ve done it without actually having a business model, but I care more about Paper than I do the iPad. And that’s why I buy an iPad. And so Apple’s hesitancy is like you can, you can at least theoretically understand it but the problem is, what’s this, they’re going to spite their nose to—

Leo: Cut off their nose to spite their face.

Rene: Cut off their nose to spite their face.

Ben: Exactly.

Leo: No I think you’ve pinpointed a real structural issue. Apple’s built a company to do 1 thing and for the true success of the iPad Pro it needs to do something completely antithetical to them.

Rene: But Apple has not, like one of the things, and Ben knows this better than anybody, Apple’s not one thing. And there’s these deep discussions that go on inside Apple too. And you can look back at the original App Store and you see code. They had accidental pop-ups that came up that showed you that upgrading and other things had been built into, or at least tested as part of the system. And they tested a whole bunch of stuff over the years. They just haven’t flipped, I don’t want to say, it’s not as easy as flipping a switch, but they haven’t gone in that direction.

Leo: Well I like your idea. We need a czar. We need an App Store Czar who has the power.

Rene: Well you do because some people, like you can see this. There are people at Apple who believe for right or wrong that there’s absolute user experience and advantages to keeping things incredibly simple so you never have to worry about it, never have to worry about trials. What if you just buy the app and all you need it for is a minute. And then you’ve taken all the value out of it. Or what it you buy it and you create data in that app. And then that app goes away and your data’s still in it. How does the person, you know, because you didn’t decide to buy it. So what happens to your data? Like they’re all, there are a little bit of questions around this. And their answer so far has been to keep it dead, stupid simple. And that might not scale going forward. And they need to have someone who again, whose job is to fight for that discussion.

Leo: What it really comes down to, what you really realize is how deucedly difficult this is and why it is so hard for a company in technology to stay relevant year in year out.

Rene: Brilliant companies.

Leo: Microsoft has to deal with this. Google has to deal with this. Apple has to deal with this. And I’m so glad we’ve got some smart people to explain this all to me. Because it’s starting to sink in. Ben Thompson from So good to have you. Ed Bott from ZDNet. Always a pleasure.

Ed: Trying to get Lucy into the shot here, but she—

Leo: Lucy’s the best.

Ed: She’s – Lucy’s trying—there she is. Yay!

Leo: Hey Lucy! There is now a new tradition on TWiT of showing your dog.

Ed: (Laughing).

Leo: You have to show your dog. Next you have to go out in your garden, Ed, and give us a tour of your vegetables.

Ed: Ah, the basil has almost been completely harvested for the season.

Leo: (Laughing) high tech, high touch. Also from, Rene Ritchie. We’re having a lot of fun. This is a great show. We’ll keep talking. As long as you’ll keep listening. But first a word from Braintree. Are you a mobile developer? You know that if you’re taking payments, payments is one of the most important things to do. And one of the easiest things to do wrong. We’re not just talking about security, we’re talking about your user experience. 70% of mobile carts are abandoned before the buy button. And that’s a lot of money you’re leaving on the table. So check out what companies like Uber do. I mean don’t they have it down? Don’t they make it easy to take that Uber? You don’t even have to think about it. You get out of the car, you’re done. There’s no button to push. Uber uses Braintree. So does Lift. So does Airbnb. So does Hotel Tonight. So does GitHub. So does StubHub. I love Braintree. Braintree is making it easier and easier for mobile app developers one of the most important things. Get paid without having to suffer through the coding of this. Ten lines of code. They make the payment experience seamless. And something like Uber is, it feels magical. And now you can add that experience to your app too. And by the way, take every kind of payment. I mean not just Apple Pay but PayPal, credit cards, Bitcoin, Venmo. And Braintree has great support. In fact if you don’t have to do the integration they can do it for you. Payouts are fast. It’s a secure—I mean really secure platform. That’s important to your customers. They’re ready to grow your company from your first dollar to your billionth dollar. They’ve done it before. They can do it for you. Many a many a unicorn uses Braintree. Braintree a full stack payment solution waiting for you at Show the boss. Show the product manager. If you’re the product manager show you’re engineers. I think you’ll reach agreement very quickly. This is the way to do it. I used, I just did a rental with Silvercar. Braintree made it so easy. It’s a, I mean it just changes your life. It’s so great. And by the way, if you sign up and you use that URL, we’re going to get you your first 50 thousand dollars in transactions 100% fee free. Fee free. If you tuned in to hear about anything besides Apple today, good luck. Good luck. I was just, I’m really excited about the iPad Pro but now it’s kind of depressed me. It sounds like this is going to be kind of an intractable problem. Here you have a platform that could revolutionize computing and you have a company that has kind of a built-in business model that’s antithetical to it. Is there a solution, Ben?

Ben: I mean, the thing to remember is and when Apple showed iOS 8 last year, like everyone was like overjoyed because finally they’re opening up, right? They’re allowing more communication, like all sorts of new capabilities, more access to the system.

Leo: Yea, how did that work out?

Ben: Well the problem is they didn’t have the business model to match. They have to open up the business model. The good news is that: 1. it shows that Apple can fundamentally change their approach because they did from an API and engineering perspective. 2. We’ve seen at least in the history of the App Store with the in-app purchase stuff that we have seen the way that a change in policy can totally give birth to a new segment. And we just need to put those two things together to have these new business models for apps. And it’s not just the trial level. Apple like, if you wanted to subscription stuff on Apple’s like institutional support. If you want to sell like on a per site basis, also very poor. The reality is like just the, unless you have an internal enterprise app store, it’s actually very hard to sell to multiple consumers. You want to sell to a school for example. And so, I think the point of having someone focused on this on a holistic level is a really good and important one. There’s no one on Apple’s executive team that is focused on developers. And then 2. I mean the App Store policy is in one of the, it’s in Phil Schiller’s org which is one of the more—there’s been less new blood than in some of the other orgs, particularly in engineering. And I think there’s probably more of the old school Apple mind-set of “We’re going to control it. We’re going to control everything. We’re not going to be held hostage by anyone. We’re going to make it super simple for consumers. And that’s it.” And I think that I’m not, I wonder if there needs to me more of a change, kind of a new blood approach. I think that its, I don’t think it’s going to be impossible forever.

Ed: Right, right.

Rene: Like Craig Federighi in Engineering?

Ben: Exactly. I mean I think we need the Craig Federighi of App Store policy.

Leo: It’s really telling. I mean Apple was famous for its developer relations in the early days when it was OS, you know, system 7 and OS9. I mean that’s where Guy Kawasaki made his bones. It was developer relations were very, very important to Apple. It’s really telling that there’s nobody at the top level of the executive team that’s even thinking about that.

Ben: There’s so many—the App Store is doing great from a top-line perspective. The revenue numbers are huge.

Leo: Right. There’s no incentive to do that.

Ben: And there’s no, there’s no warning signs. There’s no red flags from executives.

Leo: If you build it, they will come.

Ben: Well they are coming. But the problem is almost all that money is from, is coming from you know, games. And also subscription services like Netflix and stuff like that. And so if you’re Tim Cook and you have 40 gazillion things on your plate and all you see from the App Store is that it keeps on going up and to the right, like—

Leo: There’s no incentive.

Ben: How is this going to ever break through? Right. To me the big, the big signifier of the App Store is iPad revenue. Which I think, there is just no reason to buy an iPad. I think that’s because there aren’t enough of the compelling apps that make it a must buy. But we’re getting into kind of a very convoluted chain of cause and effect that’s, I will admit, hard to prove. And I might be wrong about this. I don’t think I am obviously, but I can appreciate why this hasn’t broken through to the higher levels of Apple.

Leo: Hey, things change.

Ed: But here, let me just… So one of the things was Apple needs a czar for the App Store. Well, no, they need a business model for the App Store that expands beyond what it is.

Leo: Enriching Apple.

Ed: But this is, and Ben you were there during this time period. This is, Microsoft’s unwillingness to cannibalize its own Windows business to build the future eventually wound up costing it. And this is the same dilemma that Apple finds itself in 180 degrees the opposite direction. Their unwillingness to cannibalize their highly successful consumer App Store business in order to make it palatable to businesses and enterprises. It’s the same exact thing. No matter how much you talk about the willingness to be able to disrupt your own business to see the future, you may be intellectually willing to make that happen but when you have to deal with quarterly results where every product line that you’re selling is bringing in multiple billions of dollars, or tens of billions of dollars per quarter, you don’t cannibalize that. And that’s what, you don’t need a czar, you need a, you need an executioner that’s going to come in there and basically say, “This business has to change because in 3 years the spigot is going to stop flowing.”

Leo: Steve Jobs could do it. He did do it many times. You don’t have anybody like that anymore.

Rene: But if you look at what happened to Apple recently when they did the reorganization, Craig Federighi, he went, like he was not just a Mac 07 anymore. He went to iOS as well. So development now more or less like there is the Watch and the car and stuff like that but more or less Craig Federighi’s running across org, like across the product line. Johnny Ive was running across the product line. And there’s more. Angela Ahrendts is now on-line and in-store retail. They combined those two things. That hasn’t happened with App Store. You still have App—I think store managers, like people whose job it is to sell stuff in the store, I think they would love a lot of the things that we’re all talking about. But people who are—and not developer relations, because developer relations and evangelism and review are separate organizations all under Phil Schiller but separate. The ability to go across those orgs and make things happen, I think the czar is the guy. You know, I don’t know if he’s an executioner per se, but I think the czar is the guy who goes in and makes that happen. The VP that does have that cross company power to enact positive change.

Leo: Let’s talk—

Ben: I think Ed does make a really interesting point though that all the App Store policies are very well-tuned for a wide-spread consumer market. And they’re well-tuned for the iPhone market frankly. The sort of apps that succeed on the iPhone are well supported by the current App Store. And what, and I talked about it before, the distinction between a niche business model where you’re maximizing your revenue per customer and a scale business model where you’re maximizing the number of customers. It’s very hard to support both or to kind of wrap your head around both. And the exact thing we’re talking about is, and even the free to play games, that’s still a scale model. Because the whole way they work is you get the games to as many people as possible and you get like 1% of them to give you a ton of money that’s where you make all your money from.

Rene: Like a casino.

Ben: Yea, exactly. And so, yes, and the iPhone is a scale play. You got to remember that the iPhone is like 60% of Apple’s revenue like or in profits. It’s just a huge part of the company and that more than anything is the thing with the iPad. I mean it is a niche product and it is always going to be a niche product from Apple’s perspective. And all the changes we’re making are primarily to benefit, or proposing, are primarily to benefit the iPad. And that’s I guess, that’s a reason to be concerned and frustrated and to appreciate why it doesn’t seem they think it’s a problem. Even though, these things just seem like such low hanging fruit. 

Leo: I love TR1 in the chatroom, showing his erudition, quoting Upton Sinclair. “It’s difficult to make a man understand something when his paycheck depends on his not understanding.” We’ll give that—

Rene: High success, high problems, right?

Leo: Yep. Let’s talk about Apple TV. It’s changing the face of television. “The future of television,” says Apple. It looks pretty clear that they held onto it for at least 6 months if not longer waiting and hoping to make deals with networks to provide it, to turn it into an over the top set-top box. They weren’t able to make those deals. They finally did release it. What is Apple—Rene, give us the low down on Apple TV. This was a hobby for Apple. It’s still a hobby as far as I can tell. Is this important to Apple’s overall plans?

Rene: Well it’s important in that traditionally the Apple TV like the Apple Watch enhances the overall Apple ecosystem. So if you have an iPhone and an Apple Watch, and iPhone and an Apple TV you get greater value than just having the iPhone by itself. The Apple TV and the Apple Watch aren’t really devices unto themselves yet. Maybe the Apple TV will get there. But you’re getting a really small-- Apple TV was originally this really small version of OS 10 with a big hard drive. And it didn’t really go anywhere. And you had to sync over all your content. And then with the 2nd Apple TV it became an iOS device that just streamed everything. And they’ve been building on that. So now you have a box that’s based on iOS 9, has an Apple A8 Processor, it runs Metal which is Apple’s version of OpenGL or DirectX. And it runs apps now. You have an App Store. And those apps are different binaries than they are for the phone or the iPad but you can sell them on the App Store in bundles. So you can be playing your game, you get home, your game just keeps playing on your television. And there’s going to be apps for Netflix that can do more than just what the JSON frameworks allowed them to do in the original Apple TVs. They’ll be able to be full on apps and off a ton more features. And you have like a natural language interface with Siri which does this sequential inference thing. But they really tuned it well for the television. So you can say, “Show me comedies. Show me only new comedies. Show me the episode of TWiT where Ben Thompson is a guest star.” And it knows how to process all that. “Go back. I missed what they said.”

Leo: You know that’s my favorite feature because I’m old. What did they just say?

Rene: It goes back, it goes back and then it shows you the subtitles too to make sure that you just don’t hear it.

Leo: Love that!

Rene: And it does all these little clever things and has a new remote with Touch on it.

Leo: I’m going to buy it just for that. What is the syntax?

Rene: For what, “Show Ben Thompson on TWiT?”

Leo: No, I know that one. They showed one, “Show me all James Bond movies.” Now “Show me James Bond movies,” you don’t even say James Bond movies again.

Rene: “What did he say, what did she say?”

Leo: So “What did she say? What did he say?” That’s the syntax?

Rene: Yea.

Leo: And it shows you, it shows you closed captioning for that 15 seconds?

Rene: Yes.

Leo: Sold.

Rene: Every old guy in the universe wants this.

Leo: I say that every night. “What?” Lisa does too. “What?” We rewind—

Rene: And then when they say it you miss something else. So it’s horrible.

Leo: (Laughing) we rewind so much. Ok, good. And by the way, skip ahead 7 minutes, which advertisers aren’t going to like too much.

Rene: Well I mean they’re not famous for having advertising based content on Netflix—

Leo: You’re right.

Rene: Or iTunes.

Leo: Do you think that was a problem with making deals with CBS and the locals?

Rene: There’s so many layers. But for the developer side this runs—like it’s a version of UI for the same stuff that runs on the iPhone and iOS. They hid a bunch of stuff to make it much simpler. But if you know how to develop those apps, you know how to develop Apple TV apps now. And if you have a popular app you can bring it over. So there’s a lot of advantages.

Leo: Will it be an open app store? In other words if I develop a TWiT app, obviously I have to go through the approval process, but they’re going—are they going, have they said anything about that? You know, are they going to be fairly democratic about that?

Rene: I guess it depends on whether it makes sense or not for a television. They only showed off entertainment, home shopping and games so far. 

Ben: I think the App Store will be relatively open but to get into the like universal search? Yea, that is controlled.

Leo: Yea, I understand that. And I wouldn’t expect that frankly. Although, you know—

Rene: Universal search is actually really clever. They have this idea that a developer might make a mistake and put private data as public data. So when they get it they just hash it. And then they wait until many people access in the app to make sure 1. That it really is public and it’s popular. And then they start servicing that. So you get a sort of, an absolutely assured public information. But the most popular version of that public information as well.

Ben: No, I’m talking about where you can search across shows. So if you want to find a certain episode if a show, it’s showing on Hulu or whatever.

Rene: Yea.

Ben: But that there gets, it does not include Amazon Prime Video.

Leo: Well Amazon doesn’t include iTunes either so it’s fair. In fact the Amazon search on the—

Ed: So we have fragmentation in the extreme--

Leo: Insane fragmentation.

Ed: -- in television now. And as far as I’m concerned, well Apple TV is a lovely device and I can imagine it being successful in some living rooms. It feels like an accessory to me in the same way that Apple Watch feels like an accessory. You have to be invested in one of the major high cost, high value components of the Apple ecosystem. Either a MacBook or an iPad or maybe one of the high priced iPhones and then you start to see the value of the watch and the TV. But not by themselves.

Leo: But wait a minute. Can’t I use Apple TV without having any other Apple device at all?

Rene: But it’s not as valuable, I mean the value, yea.

Leo: Well as long as I can say, “What did he say?” and “Skip ahead 7 minutes.”

Rene: Yep, no. All of that is totally independent.

Leo: And the federated search. So what—by the way, Fire TV had the same problem. It searched. Not everything. Seemed to really favor Amazon. Ben, what do you know? Is Apple going to not allow search across some platforms?

Ben: No, they, no. So you have to get into universal search. That’s a separate—

Leo: Well that makes sense. Because you’d have to have a separate database that they could read and that makes sense.

Ben: Yea the big hole is they don’t have Amazon Prime Video and it doesn’t seem—

Leo: Well they don’t have YouTube. Did they put YouTube on it?

Rene: I wouldn’t be surprised if they got Amazon Prime Video.

Leo: And YouTube?

Rene: It suits their business models, both of them.

Ben: Well, you would think so. But they didn’t on the previous Apple TVs.

Leo: Well it’s a non-starter until it does. I agree with you.

Rene: That stuff is going to be a heck of a negotiation. I wish I could listen to that negotiation.

Leo: Right now almost anybody who is a cord cutter or just wants these kinds of capabilities has more than one box. They have a Roku and an Apple TV. I have all, I have everything. 

Rene: And again Leo, I hate saying this but—

Ed: Leo, I have an Xbox One.

Leo: I like, I have that too. And I love the Xbox One. 

Ed: And a Comcast cable subscription. And between the two of those I have more entertainment than I need. And I’m in the demographic that will pay large amounts of money for video content. And the upcoming demographic, the demo, the one that you know, all the advertisers want here is willing to hardly pay anything for stuff.

Leo: No, they watch YouTube on their iPhone.

Ben: They are, do seem to be willing to pay for Netflix and Hulu. I think like 22% of – it’s a pretty significant number of the range which is much higher than they pay for lots of other categories. But I think that the bigger issue, which I thought you were going to say Ed, is the usage for younger generations. They’re primarily watching these services on iPhones or on iPads or on their computer.

Ed: Right. Yes.

Ben: The actual usage of the – there’s getting to be a bifurcation between the viewing of TV content and the uses of the TV set. And the amount of time been watching TV has remained super consistent for ages. It’s actually, it’s a huge deal that it decreased by a couple minutes over like this last year. Which is like the first time it’s ever decreased at all. But even then it’s still been very, very large.

Leo: And if you include screen time it’s probably going up. Total screen time, right?

Ben: Well, no, the issue though is just the TV set in general in the very long run I think is only ever going to be an accessory. It’s going to be much less the center of things. And I think that for young people in particular there, having their own screen is a big deal. And it’s—

Ed: So you share that screen. And you share that screen with people. You don’t have a, it’s not a communal experience. It’s a shared, “Here, look at my screen. Here’s what’s on my phone. Look at my phone. Here’s what’s on my laptop. Look at my laptop.” It’s not, I mean the idea of a big screen in a living room is first of all the idea that you have a living room is alien to a younger generation. And the idea that you then have content that’s coming exclusively to that big screen and everyone sees it at the same time is also alien. And it will see very quaint like rotary dial phones in about 10 years.

Rene: But I wonder if how much—because right now we have a discontinuous experience. And I wonder because like continuity and extensibility and all these things are playing huge into Apple’s current of plans. You’re playing a game on your iPhone. You come home, no one else is using your TV. You’re just playing it on the Apple TV. It’s a continuous experience. We used to complain, “Oh, I have Angry Birds on one device. I can’t even pick up my iPad and play it.” And you’re going to be able to pick up on one device, play on another. So I think the lines are going to blur. And to the previous point, I’m going to keep saying this, Leo, Amazon Prime still isn’t in Canada. So it doesn’t matter to me if you want to watch or not. I don’t know how many channels you get—

Leo: (Laughing) if you only got Amazon Prime you’d know.

Rene: I know. But the international services are there. The ones that most of, I think it’s like a hundred countries or something really care about are on that box. And I’m sorry the US doesn’t have all of them but for most of the world it’s going to be a great box.

Leo: Can I just tell you? Apple knows exactly why people are going to by an Apple TV, even at the increased price of $150 or $200. Because they showed the things that sell it for me. I just mentioned “What did he say?” and “Skip ahead 7 minutes.” Crossy Road multi-player? Sold. The Major League Baseball.

Ed: The point is, Leo, they’re selling Apple TV for old people.

Leo: Wait a minute, major, you like Major League Baseball? You like Major League Baseball? That was an amazing demo. 2 games going on, you flip back and forth.

Ben: But here’s the thing. A lot of people focus on that demo. And it was an amazing demo and it shows why software, like software is better than this linear sort of stream. What they didn’t tell you about the demo is that you can only use the Major League Baseball app for games that are 1. Not on national TV and 2. Not in your home market.

Leo: (Laughing) So I’m going to be watching a lot of Toronto Blue Jay games. I’m excited.

Ben: So basically you will. You can watch all the Yankee’s games you want. And so if you’re a Yankee’s fan it’s great. Except the ones on national TV.

Leo: But that’s Major League Baseball. That’s them, that’s their blackout stuff.

Ben: It’s them and it’s every other sports league. Because the fact of the matter is the value and economics that come from bundling are so much greater than an over the top service, that’s going to be the case for the foreseeable future. And so yes, it’s kind of a similar thing to the iPad thing. You can have the technology in place, but if you don’t have the business model in place then it doesn’t matter. And so I think for some people, like if you’re a Yankees fan living in, not living in New York, like that will be up and Apple TV looks freaking fantastic. But you’re, that’s not everyone. I think it is going to be more of a niche product. And it’s, and a big part of it is the business part has to come through. And I think people are, like people in tech have been predicting the end of cable and linear TV for like going on like 40 years now. And that’s before cable even existed which shows how in-depth this sort of argument is. And yes, it is fracturing. And the reason it is fracturing is because the jobs that we as TV to do are getting narrower and narrower. But that doesn’t mean that tomorrow or next year we’re going to be watching NFL football games with our NFL app on Apple TV because the economics just aren’t there. And until they’re there, it’s going to be a niche device. Leaving aside the fact that I’m not sure how much young people are even using big TVs anyway.

Leo: Actually my kids will watch YouTube on the big TV. Which is really strange. But there is a communal aspect. Don’t forget these people, under 25s are maybe the most communal generation ever. They do everything. They date in groups.

Ben: But that’s only a fraction of your TV usage. And so I’m not saying TVs are going away. But it’s like people will still want private cars. I just think that in the future they’re more likely to rent them than to own them. Which gives the Apple Car question. Like so I think that—

Rene: Uber for television.

Ben: None of this stuff is ever going away but I think the—(laughing). I’m just going to stop there.

Ed: (Laughing)

Leo: (Laughing) Uber for television. What would that be? I don’t even—I can’t even. Ed you’re right though. You know the Xbox One with that NFL app on the side there with the stats and the fantasy stuff? That’s cool. That’s nice. That’s actually a well done app.

Ed: It’s very—

Leo: And nobody knows about it.

Ed: And nobody knows about it. And what we have actually in TV now is a situation where we don’t have dominant—in every other platform you have one or two dominant manufacturers, you know. In smart phones it’s Apple and Android. And nobody else matters. In the TV set top box base, you either get what your provider gives you or you have an incredible assortment of fractionalized, randomized boxes.

Leo: You should, you should—I can’t—Lisa says, “Oh good, let’s watch Ray Donovan.” I say, “Well we can’t watch Ray Donovan in the living room. We can only watch Ray Donovan in my den because the device that recorded Ray Donovan—.” It’s crazy.

Ed: I had to explain this to Judy the other day. “I’m sorry, we can’t watch this movie on the big screen TV because it’s not on a service, it’s on the Xbox One.”

Leo: It’s crazy.

Ed: And so I’ll have to pull it up on the laptop or the tablet and Mirror Cast it or Chromecast it to the TV. And I feel sorry-- we’re about to go on some really fun international travels. And we’re going to have houses sitters here. And I have to write—

Leo: Oh dear.

Ed: -- a damn manual.

Leo: Oh dear.

Ed: I have to actually write a manual for our house sitters on how to work the TV. And I’m tempted to just say, I’m tempted to just unplug it and throw a blanket over it.

Leo: Where are they from?

Ed: One’s from—our house sitters? They’re from Seattle.

Leo: No, no, oh, oh ok. Because I say if they come from Germany or something you just say, “Turn to channel 3 and you’re good.”

Ben: The issue is that the differentiation in TV is driven by the content. It’s not driven by the device. And this is why for, why the App Store is potentially the most interesting part of the Apple TV. Is because the App Store, if that becomes a differentiator, that gives Apple more control and more leverage with the content providers. Right now the content providers are the ones that have all the leverage. And it’s the same thing in music I’d add as well. Like in music, it’s the labels that have all the leverage which is why from a pricing and content perspective, Apple Music isn’t differentiated.

Leo: It’s not differentiated, yea.

Ben: Look at it compared to iTunes. What made iTunes the juggernaut that it was, was piracy. And what I mean by that is the labels were so scared of piracy they were willing to do a deal with Apple.

Leo: Right.

Ben: Today streaming killed piracy. Which means the labels in some respects stronger than they’ve ever been. So Apple gets no special favors. And you have the same thing in video where if the content provides a differentiation that means there’s not going to be a dominant player. Like in a stack in whatever the industry might be there’s one layer that matters. And that layer and everything else is going to be commoditized.

Leo: Is Chromecast the solution? Chromecast really is interesting. As long as apps have Chromecast support built-in you can use any device to cast it to your TV.

Ben: I love the Chromecast. I think it’s fantastic.

Leo: I think that’s is a very clever way around this.

Ben: No one in this sector is going to become dominant unless someone gets leverage. And so that’s why the App Store--

Leo: And nobody’s going to get leverage because—right.

Ed: And you know even as simple as you and I think that Chromecast is or Mirror Cast, every Windows 10 device supports Mirror Cast and my Android phone supports Mirror Cast as well. You’ve got all those things in there but ordinary people, their eyes just glaze over when they try to imagine the idea that there’s something they’re watching on their phone or a tablet or something and then they have to go through a series of—if it’s more than one click to make it appear on the TV it’s not going to happen. And it’s still—the barriers to entry are too high. There’s a reason that Google made the price of the Chromecast $35 or whatever it was because they wanted to, they wanted to see that out there—

Leo: Give it away, yea.

Ed: -- into the technically sophisticated audience. But I don’t think that ordinary people are going to be able to manage this complexity. We still have—the problem is still complexity.

Leo: Right.

Ed: And complexity is being driven by business models and ridiculous global copyright laws.

Rene: And it’s also not reliable enough. Like if it fails once or twice they just stop trying it. And all of them fail on you enough that most people will never touch it again.

Ben: Well the issue—

Leo: How do normal people live? I don’t, I don’t understand.

Rene: Simpler, better lives, Leo.

Ben: Everyone is focused on this complexity issue. But that is 2nd. There are 2 aspects of complexity. There’s UI complexity. And everyone’s like “Oh, I can’t wait for the cable box to die because it’s UI’s complex.” The problem is that is a 2nd order concern. The 1st order concern is “Can I find the stuff that I want?” complexity. And the cable box still wins here. And the complexity that you guys are driving at is, do I look at it on Apple TV? Do I look at it on Amazon Fire? Do I look at it—like where do I find it? That is a different sort of complexity that Apple TV has yet to solve. And the UI can be as beautiful and intuitive and as fun to use as it could be. Until it solves that 1st order level of complexity, because what matters is the content. That’s what I mean by that being the differential layer. It’s going to have trouble breaking through in competition to something that has all the content, even if it has this convoluted remote and this ugly grid on the TV screen.

Leo: Is there a genetic difference between people? Because I can sit down at any television and mulit-media setup, see the remotes, look at what’s there and go, “Ok. I can do this.” And then there’s other people (laughing).

Rene: Yea, but we can’t do what they do, Leo. It’s like a vocabulary where vocabulary is so vauge.

Leo: What do they do that’s so great?

Rene: It could be medicine or mechanical engineering or they can take a car apart and put it back. I mean everyone has aptitudes.

Leo: But I guarantee you everyone on this panel and probably everyone listening doesn’t need a manual to figure out how to watch TV. It’s obvious. You just put it on HDMI 1. And then you’ve got to turn on the Xbox one and the Roku box.

Rene: They will throw that controller at you if you think that.

Ed: We are the 1% or even the one tenth of 1% in terms of technology. And that is a real problem. The problem is the conceptual layer that goes on top of this. If I can—I spend a lot of my time as an instructor. I write books.

Leo: Oh, interesting.

Ed: I write books and manuals and articles that explain to people how to do things. And the hard part is not the step 1, step 2, step 3. The hard part is conceptually. Where you explain to someone how this thing works so that when the steps that I just wrote about stop working because Microsoft or Apple or Google came up with an update in 2 months that breaks that step by step regime that I talked about. If they understand the conceptual thing that I explained, they can get through it very easily. But those conceptual layers—

Leo: Not easy.

Ben: I’ve got to share this tweet because I think it captures it perfectly. Steven Sandolf just tweeted me on Twitter. He says, “People are literally willing to flip aimlessly through channels to find what they’re looking for. As long as they know it’s on somewhere.” But that’s—what’s so smart about that is the key is that they know it’s there.

Leo: And if it’s 500 channels they’re never going to find it.

Ben: They’re absolutely will. The challenge for an Apple TV is if you can’t turn on the Apple TV and know that what you want to watch is on there. And you have this additional layer, “I want to watch X. Which thing do I use?” Like the UI doesn’t matter if you have this first, this issue of you don’t even know if what you want is—it’s uncertainty. Uncertainty is even worse than a bad UI. Like that’s the worst UI of all.

Leo: I have in my—I just looked it up. I have in my Evernote a note, “How to turn on the den TV.” Because I figured I’m going to be sending this text out. “Turn on the TV with the small silver remote. Then choose CBL/Sat from the Onkyo remote. Then make sure the Xbox is turned on by pressing the Xbox button on the game controller. Then choose TV on the Xbox. Sometimes the TV turns off so if the screen goes dark, turn it back on with the little silver remote then use the Xfinity remote to choose 702.” That was to watch one thing once.

Ed: My version has PDFs with screen shots of the remote with all of the buttons labled.

Leo: (Laughing) and by the way, this is out of date now because if you use the silver remote to try to turn the TV back on, it’s going to turn the Onkyo off because of CEC. So now—let’s take a break.

Rene: To Ben’s point, like consistency is absolutely a user feature. And if you don’t know it’s going to be there, you going to doubt it’s going to be there then it just effects your whole usage patterns.

Leo: I think it’s worse than that. I really do. I think it’s a mess but we’ll figure it out. So and that’s why you end up watching The Sopranos instead of The Wire. Like you wanted to. When we come back we’re going to talk about the things Apple left out. Some very big things that Apple left out of the keynote. Rene Ritchie is here from Ben Thompson from Stratechery. Ed Boot from ZDNet. I’ve got the 3 smartest people in the world here. We are, this is, we’re getting down to it.

Rene: You could run an Apple Keynote like that, Leo.

Leo: I feel like this stuff is like chess or something. No, it’s worse. It’s like a Rubik’s Cube mixed with 3D chess and you make one move and 3 years later, “Oh crap. We screwed up the business model,” and the whole thing falls apart. It’s—I don’t know how anybody survives in this world. It’s gotten too complex and that’s why I’m going to move to a farm. Are you buying the new iPad, the new Apple Phone? Maybe you want to find somewhere to put your old one? Can I make a suggestion? Gazelle. Gazelle. G-A-Z-E-L-L-E. Gazelle. Gazelle makes it easy to buy and to sell. So let’s talk about selling first. That’s how Gazelle got famous. You can trade in your old devices. By the way, get a price that’s locked in so you know what you’re going to get and you have 30 days to decide. They will buy even broken iPads and iPhones. Of course they buy other devices like Blackberries and Samsung Galaxies. They’ll by Surface Tablets, Google Tablets. If you go to you’ll see. What? $335 for my 6 Plus, $375 for flawless. That’s awesome. Now here’s the deal. You got 30 days to pull the trigger on that. You don’t have to. There’s no obligation. The only obligation is from you, from Gazelle to you that they’ll give you that price. Once you decide, “Ok, I’m going to take advantage of this,” you checkout. They send you a box, a pre-paid postage. They’ll pay postage on anything worth more than a buck. You pile that box. You can put a lot of stuff in there. You’ve got old gadgets that are just gathering dust. That’s crazy. That’s like saying, “Oh here’s a hundred dollar bill. I’m just going to leave it in a drawer.” That’s crazy. Set it there. If you forget to wipe the personal information or you can’t because the device is broken, they’ll do that for you. And then they turn around and they give you your money very fast. You can get a check in the mail. You can get a direct deposit in your PayPal account. That’s really fast. Or for an extra 5% use the Amazon gift card. If you buy a lot of stuff on Amazon that’s a great deal. Gazelle’s paid out well over 200 million dollars to over a million customers. And now they buy and sell. So the best stuff that comes into Gazelle will be sold, you can buy. Certified Pre-Owned. When I say certified I mean it. They have this very elaborate, 30-point quality inspection on every device they sell. Make sure everything not only functions totally, perfectly, exactly right but that the screen doesn’t have scratches on it, there’s no defects, things like that. You can get—there’s various quality. You can get it like new. That’s going to cost a little more. If you want to save a little more and this is what I do for my kids when they lose their phone. I get the slightly used. It’s kind of you know, slight signs of wear but again 100% functional. 30 day return means you’re guaranteed that it’s going to work. You have 30 days to return it no risk to you. I just really love Gazelle. G-A-Z-E-L-L-E to buy, to sell. Remember, This is a good time to buy last year’s iPhone on Gazelle and get a great deal. Save a lot of money if you’re worried about that. All right we’re going to get back to the conversation. Lots more to talk about with our great panel. But first if you missed this week on TWiT, you missed a lot. Take a look.

Narrator: Previously on TWiT.

Andy Ihnatko: Hey there, Mike. I can tell you I’m here at the Ed Sullivan Theatre and the anticipation for the new iPhones and the new Apple TV is just monumental. I’m not recognizing most members of the press here because it means that Tim Cook has more time for me.

Narrator: Tech News Today.

Mike Elgan: iOS 9 will become available next week but a new feature has shown up in the beta. You can train Siri to respond to your voice and nobody elses. Siri’s version of this feature will prevent something that actually happened today in a White House press briefing.

Male Voice 1: Was the president upset that he couldn’t get even one Republican perhaps to sign?

Siri: Sorry. I’m not sure what you want me to do.

Audience: (Laughter).

Narrator: MacBreak Weekly.

Allison Sheridan: So Christina, I have my purse right here and I carry my iPad in it. Am I going to be able to do that with a 12” iPad Pro?

Christina Warren: If you can fit the new Mac Book in your purse, then you might be ok. But realistically speaking probably not.

Narrator: Before You Buy.

Leo: The Moto X really appeals to me for a couple of reasons. One is it’s a very pure version of Android. This will be your Lollipop 5.11. When they do add stuff, they add stuff that’s really useful and you’ll be able to put the phone to your ear and speak to Google Now and it will respond only through the speaker.

Narrator: TWiT. Great tech news analysis every day.

Mike: Coming up this week, Dreamforce which is Salesforce’s big annual event, kicks off on Tuesday, September 15th in San Francisco. Apple’s iOS 9 and WatchOS 2 will become available to the public on Wednesday, September 16th. And the TechCrunch Disrupt Hack-a-thon begins on Saturday, September 19th in San Francisco. For all this and the rest of the news this week tune into Tech News Today at 10:00 AM Pacific, 1700 UTC at Back to you, Leo.

Leo: We’re talking high tech. We’re really talking Apple today. There’s a lot of Apple information from the week. There’s been other news too. We’ll get—I mean Twitter. I’ll just say the words. Google. Facebook. They’re all involved. What is—you may be able to clarify this for me. I’m very confused. Somebody in the chatroom is saying, “You can’t store apps on the Apple TV. They use on-demand resources. Serenity Caldwell wrote a good article explaining this.” Are Apple TV apps limited to 200MB? That doesn’t sound like much.

Rene: No, so what happens is they don’t have giant hard drives in them so they have limited MAD flash storage. So what happens is you have a 200MB initial download. That could be something as simple as a splash page. Whatever they want. It’s designed so that if the device is full it doesn’t give you this big error message that says, “Sorry you’re out of room. Please go delete something.” Because they don’t want you to have to do file system management on the Apple TV. So what it will do is download that 200MB which will almost always fit in and then download a palliative of up to 2GB immediately if there is no storage pressure. Otherwise it will start removing resources from other apps as it downloads that. Sort of intelligently balance what’s on the device.

Leo: What? So I might want to play a game like Crossy Road and I have to wait until it downloads because it’s—

Rene: Well you’ll have to wait until it downloads anyway. So what this does is like you download—

Leo: Yea but just once.

Rene: Well this is the same thing. So in your example, if you downloaded like Infinity Gauntlet or something. And you didn’t play it in 3 months. And then you downloaded Crossy Roads it would start removing the oldest played levels from the Infinity Gauntlet game. And the ones you already passed and haven’t played in a long time to make room for the very 1st Crossy Roads levels. And as you play more it will download more and more levels and get rid of older ones. So it’s trying to intelligently balance all the space sort of like iCloud Photo Library or iCloud Music where it wants to keep everything near-line. So you have a much bigger capacity. It’s Ed’s call point again. You have much bigger capacity than you have on the local device.

Leo: So they sell 2 versions. They sell one for $150 that has what, 16G?

Rene: I think it’s 32G and 64G.

Leo: 32G and 64G. And then $200 for the—does it even matter then? Should I just get the little one?

Rene: You’ll be able to keep much more local content available. It will do less, it will have to do less of the load balancing.

Leo: All right. Well, I remember all the hell Microsoft went through with the Xbox, the original Xbox One announcement about always on and checking the home office. And it’s funny. Apple just, nobody cares.

Rene: Well they’re not doing anything other then—so when you make an app, the developer tags like this is the initial download—

Leo: You need this, right.

Rene: -- these are the levels. Like it might be video tutorials. Once you watched the on-boarding thing, you don’t need to store that 4G video anymore or that cut scene anymore. So it just dumps them. And if you ever decide, “Yes, I really want to watch that again,” it will go download it for you.

Leo: One thing they didn’t mention, which sort of shocked me, is HomeKit. I thought the new Apple TV was all about HomeKit, the home automation product.

Rene: They moved that back to iCloud. Initially the Apple TV was a remote access point. So if you were at the airport and wanted to switch off your lights you could do that. Now that happens through iCloud. So it doesn’t have to do anything on the Apple TV anymore.

Leo: Oh. So that’s that.

Rene: Yea, some people wanted to—some people have older home automation equipment and they would, they were hoping that Apple would do something where the Apple TV would magically make all the old things like our Hue Light Bulbs, Leo, work with HomeKit without having to go buy a new Hue Hub.

Leo: Right.

Rene: But then it still wouldn’t be secure and then Hue hasn’t made the lights work with anybody’s hub by themselves. So that’s sort of a fantasy at this point.

Leo: Is Google—Google seems to have the same fantasy. The On Hub Router really seems to be less of a router and more of a home automation hub.

Rene: It will but it’s still for example, unless Hue enables their lights to work with it, it’s not going to work with it. So there’s a lot that has to happen on both the vendor side and on the platform owners side for that to work. You’d have to essentially make every light bulb its own tiny hub instead of just having that one Hue Hub that connects to all the light bulbs.

Leo: I’m increasingly of the opinion that nobody’s ever going to get home automation working and it’s just a—

Ed: We’ll get there.

Leo: Really?

Rene: We’re optimists, Leo. We’re optimists.

Leo: Yea but you and I, we’re doing stupid things like Hue Lights and my doorbell with a camera on it. But nothing talks to anything.

Ed: Leo, your great-great grandchildren are going to live in this amazing world.

Leo: No they’re not. They’re not going to be able to watch TV (laughing). They’re not going to be able to do anything.

Ben: You’re in the trough of depression which is like the adoption curve. Which is there is a ton of hype at the beginning and it goes up. And then it way overshoots the capabilities.

Leo: Right.

Ben: And then it was like, “This sucks. It’s never going to happen or come through.”

Leo: Right. That’s where I am now.

Ben: And the technology keeps increasing. It keeps increasing and increasing. And then eventually the expectations match up with what’s actually there and you realize, what’s the great Bill Gates quote? “You will always overestimate what can be done in a year and drastically underestimate what can be done in ten.” And that applies to a great many things. I would imagine this is one of them.

Rene: And the other thing, Leo, is there is no 4K story. And yes, 4K is not, not many people own 4K sets yet. There’s not a lot of 4K content yet. But the Apple TV does not, the new Apple TV does not support 4K.

Leo: Yea and while there was some speculation that maybe the hardware could and they just could turn it on with a software switch, the problem is HDMI 1.4, this ain’t going to be a really good solution for 4K. It can do it but only at 30 frames. This is not a 4K device. Do not delude yourself.

Rene: And again there’s a lot bigger problems to solve. Like if there becomes an iTunes 4K, how are they going to handle upgrading your content? Remember when it went to HD they offered you the ability to pay to upgrade all that stuff? And--

Leo: Yea but I can shoot 4K on my iPhone, on my new iPhone.

Rene: Yea but then it gives you awesome digital zoom and the ability to crop down, to sample down to awesome 1080p, Leo.

Leo: Right.

Ed: And you have just made my point that the Apple TV is an accessory for people who are already invested in the Apple ecosystem and are willing to upgrade it in a year or 2 or 3. And are perfectly happy—if someone’s coming into this for the 1st time they’re going to focus on the limitations. If they’re coming into this as a member of the Apple ecosystem already they’re going to focus on the synergies.

Leo: Synergies are for sheep.

Rene: I had to buy an iPhone just to get GPS, Leo.

Leo: Hey, by the way, ok, so I bought the iPhone 6S Plus. I said I would. 128G because I wanted to spend more money.

Rene: Did you get rose gold?

Leo: Yea I did and I’m worried now because I think it’s pink.

Rene: Awesome. It is pink. But it’s an awesome metallic pink, Leo. You and Andy and I will match.

Ed: It’s so pink. It is, it is, it is, really, really, really pink.

Leo: It’s pink!

Ben: There’s nothing wrong with pink.

Leo: It matches my face. Pink.

Rene: It’s the new color, Leo. Everyone will know you have the new iPhone.

Ed: You’re going to, you’re going to put a case on it anyway.

Leo: Everybody puts a case on it. I’m going to put a case right away. Maybe I’ll have a little pink peeking out but it won’t be like—

Ed: Yea, there’ll be a little tiny pink frame around the outside of it.

Ben: I’m drinking from a pink water bottle.

Leo: Why don’t they just call it pink?

Rene: Pink phone colors, because rose gold sounds more inspirational.

Leo: Now I know what rose gold is. Because it’s a copper colored gold. I’ve seen actual rose gold. It’s not that color. Rose gold is coppery. This is pink.

Rene: Well the gold, my iPhone is more champagne than it is actual yellow gold, too. It’s gold-ish. Gold-y. It’s like chocolatey in a popsicle.


Leo: This is, this is a geek couple. We’re in bed. It’s 12:01, one minute after midnight Saturday morning. We’re in bed. She’s got her MacBook. She’s on Verizon because—

Ben: Oh, that’s a mistake.

Leo: Yea, no. I was smart. I used my iPad through the App Store, right?

Ben: Yep.

Rene: Yep.

Leo: She’s done. She beat me by the way because the Apple Store opened later, like 12:05 or something.

Ben: Oh, she bought through Verizon. Oh, yea.

Leo: She went through Verizon right away. She said, “Got it.” She said, “What did you get?” I said, “Rose gold.” She said, “Oh crap. I didn’t think you were going to get rose gold. I got rose gold.”

Rene: We’re rose gold buddies now, Leo. All of us.

Leo: Yea. Are you rose gold too?

Ed: This is like--

Rene: Yep.

Ben: I bought silver. 

Ed: This is like people who think they’re winning because they you know, they were the last bidder standing in an E-Bay auction.

Leo: (Laughing) It’s so pathetic. I win! 

Rene: First! 

Leo: First! I know actually I was—because you know the only people who are doing this is us. I’m watching Rene on Twitter, he’s watching me on Twitter. “What did you get? What did you get? Did you get in? Where’s the best place to go? Is it Verizon? Is it T-Mobile? Did you go right through the App Store on the web? Or do you go to the App Store on the iPad or the iPhone? How did you do it?” Silly.

Rene: You got a much better shipping date than me. I’m getting mine a month over.

Leo: What?

Rene: Yea.

Leo: Did you get up?

Rene: I got up at like 12:03 or something and I figure I’m playing some sort of Canada tax on my shipment.

Leo: Oh, there’s your mistake. Yea, you got to get right up at 12 o’clock. Refresh, refresh, refresh, refresh.

Ben: Yea I will get, I mean I won’t even though I got the first day shipping date, but I have to have it shipped to me then in Taiwan. 

Leo: That’s kind of funny because they’re going to ship it from China to the United States and then back to you in China, in Taiwan.

Ben: Yea, it’s annoying because it’s going on first day Hong Kong and China, and Taiwan is supposedly part of Apple’s greater China region but we don’t get it 1st day.

Leo: Would it be, would it be—go ahead.

Ed: See I want the one that comes with iOS 9.2 because those other ones seem--

Ben: The middle finger emoji?

Ed: -- kind of broken.

Leo: Well wait a minute. Don’t we get the middle finger emoji right off the bat?

Rene: iOS 9.1, no that’s iOS 9.1. Just came from Beta.

Leo: We don’t get the burritos and the tacos and the pizza? The hot dogs?

Ed: You get the middle finger emoji just for buying it in the 1st hour, Leo.

Leo: (Laughing) I get the privilege of spending $1,050! I win! For pink!

Rene: That’s only $20 a month, Leo. You’ll be fine.

Leo: It’s so interesting to watch because for instance, you would strongly get the impression that Apple invented the middle finger emoji. But in fact all they’re doing is now supporting the full Unicode in the emoji stack.

Rene: It’s a big deal because they didn’t before and some people were saying, “Oh, Apple would never do it.” And there was all our nerd friends, Leo, were blogging about it saying, “I don’t care about any other feature in iOS 9. I just want the reverse hand with middle finger extended emoji. Or the taco or the burrito or whatever.”

Leo: And American food. American food.

Rene: There’s still no poutine. I’m just going to say that. Still no poutine. I’m very, I’m distraught.

Leo: No, American food. Forget the poutine.

Rene: American.

Leo: Nobody wants poutine. How would you even make poutine in an emoji?

Rene: All you do, all you do is you hold down on the French fry and it gives you tater tots, the poutine and chips as an option. 

Leo: (Laughing) I want garlic fries in there because I’m from San Francisco.

Rene: Yea. I mean they’d sell a million of them.

Leo: You’re right. That’s actually brilliant. And actually emoji’s are passé. It’s all about stickers now, right? Emoji’s are too little. They’re little bitty things. I want giant stickers.

Ben: Yea stickers are awesome.

Leo: I agree.

Rene: We need stickers on iMore.

Leo: Which messaging app do you use, Line?

Ben: Well the problem is, the problem is the killer feature of any messenger app is who else is on it. 

Leo: Right.

Ben: Which means, yea. I use a ton of them. But it varies by country. I mean I use Line for everyone in Taiwan. But then I mostly use iMessage with Google Voice’s horrendous client for text messaging as a fall back for anyone that doesn’t have an iPhone for people in the states.

Ed: Good God.

Ben: It’s sad. It is sad.

Leo: I love—I use Telegram because it’s got the best set of giant emoji’s of all kinds.

Rene: You sent me a Donald Trump. It was awesome.

Leo: I sent you Donald Trump. I’ve got Trump. I’ve got Taylor Swift emoji’s. I’ve got Star—I mean where else are you going to get a Star Trek emoji?

Ed: Wars. Wars is the word you’re looking for. Star Wars.

Leo: I know. I do it just to drive you crazy.

Rene: Do you have Eddy Cue in his red shirt sticker?

Leo: No, is there an Eddy Cue emoji?

Rene: I don’t know, there should be. Somebody’s got to make that.

Leo: Damn. With the little folded up cuffs?

Ed: Someone needs an Eddy Cue and Scott Guthrie emoji, both in their red shirts side by side.

Rene: Red shirts.

Ed: Only one makes it to the planet alive.

Leo: Who’s the hair guy at Microsoft?

Rene: Joe Belfiore?

Leo: Joe Belfiore has a beautiful, beautiful head of hair for a man.

Ed: Yep. Leo.

Leo: (Laughing) I think we’ve got something here. A set of stickers of great hair guys. Shingy, Joe Belfiore.

Rene: Craig Federighi.

Leo: Craig Federighi.

Rene: Hair Force One sticker right there.

Leo: Love it.

Ed: Wow.

Leo: (Laughing) I have my own mechanical Leo bot on Telegram by the way. If you were on Telegram—

Ed: My work is done here.

Leo: @chieftwitbot. Just follow @chieftwitbot and it’s an automatic little bot on Telegram. Because I have no friends, so.

Ed: I’m filing trademark infringement lawsuits against you left and right, Leo.

Rene: He’s calling Disney right now.

Leo: Oh man. Oh, you should see these stickers. Follow me on Telegram I’ll send you a set.

Rene: But you said you had Taylor Swift out loud, Leo? I’m so sorry.

Leo: No but Taylor Swift is perfect for certain—see stickers are all about communication. And there are times when you need a Taylor Swift emotion. You know, to really put the idea across. I think emoji’s really own that.

Ben: This is why a Line is so—I mean part of the thing is because it’s Japanese background. The Japanese have always been good at this sort of—

Leo: They understand this.

Ben: Yea the character and building like—

Leo: It’s in their language. They’re idea-grams. They understand how a picture is worth a thousand words.

Ben: Yea. Don’t get me started on like misconceptions of Chinese characters. But there’s actual characters that are consistent. And the level of emotion that can be exhibited in detail in context is really incredible. 

Leo: I agree.

Ben: People laugh and joke about them but I think once you get used to using them it’s awesome.

Leo: I just sent you, Rene—

Ben: I am a well-known sticker advocate.

Leo: Yes! Look it. Rene, I just sent you the perfect Taylor Swift emoji.

Rene: Opening it.

Leo: Of shock and surprise. There’s nothing—

Rene: We’re going to get an open letter, Leo, We’re both in a lot of trouble.

Leo: You know what’s great about this is when you, what you do is you pick an emoji and then it shows you the stickers you have that show that emoji.

Rene: How gorgeous is that, Leo?

Ben: Wait, show me, show me. Let’s see.

Ed: I don’t’ even want to know what the one, what the one—

Leo: The Pedobear? Hey you got to work hard to get that. And above that is The Big Bang Theory. Yea.

Ed: This is frightening me.

Leo: Oh, man, come one, Ed. Follow me on Telegram. I’ll send you a sticker. The other good thing about Telegram is if you don’t have that sticker you just click on it and you can add it. So they’re viral. They propagate like disease.

Rene: And they just want people using their stickers because one day they’ll figure out how to charge for them.

Leo: No, no. You know what it’s an open platform. These are just—

Rene: I know I couldn’t resist the Bill Gates.

Leo: Yea. Look at the—by the way, the iPad Pro is going to be the best Fallout Shelter platform ever.

Rene: The games are terrific. I tried a bunch of them. They were really, really nice.

Leo: I can’t wait. Well I was excited about getting the 1st iPad because for Words with Friends was so hard to do on a little 4” iPhone, 3.5” iPhone.

Rene: Those tiles are huge now, Leo.

Leo: They’re big.

Rene: Yea.

Leo: Rich experience.

Ed: You don’t need your reading glasses.

Ben: Yea we’re definitely getting the “In what respect does Apple’s new products appeal to old men?” angle on this show.

Leo: (Laughing) Oh, I’m an old man. 

Ed: Let me get, let me get my—

Rene: And it’s big so I can actually see it.

Ed: Rick Perry gave me these glasses.

Leo: Hello there, Ed. How are you feeling about the new living images that will be part of your iPhone? Harry Potter-like animated images.

Ed: Wow, you know it’s like nobody ever did those before.

Leo: I think Nokia did it before anybody did.

Rene: 1812. It was done in 1812.

Leo: 1812. HTC Zoe is similar. The idea is what? That the camera as soon as you point it at something for a second or two, it’s just recording already. Then you take the picture.

Rene: 1.5 seconds.

Leo: And then it records another 1.5 seconds and then what?

Rene: Well it’s not recording. So it’s taking still images and then animating them. They were really careful to say it’s not video it’s actual still images. And it kind of doesn’t look like video. It looks like still images being played as fast as possible.

Leo: It’s an animated .GIF.

Rene: Yea, basically. Although I think it’s in their CORE UI format. I don’t think it’s in .GIF format.

Ed: I’m sure it is. Also it’s pronounced—

Leo: .GIF?

Ed: Never mind.

Leo: (Laughing).

Rene: Ed, the g is silent. 

Ben: It’s .GIF.

Ed: It’s pronounced throat warbler mangrove.

Ben: It’s .GIF.

Ed: There’s only a handful of people who will get that joke.

Rene: Actually you know I think they’re .JPEGs.

Ed: You people just laughed out loud.

Leo: Throat warbler mangrove. I got it because I’m an old man.

Ed: Yea.

Leo: Yea. It is, it is compatible with Facebook? Can I post my Harry Potter-like—

Rene: You can send it to older iPhones and you can do, you can do a long press because there’s no forced press on the older iPhones. You’ll do a long press and it will and anime. But so far I’ve only seen it on Apple’s platforms. 

Ed: Leo, we didn’t talk about that but the 3D, we haven’t talked about the iPhone at all which is interesting.

Leo: Yes, isn’t it?

Ed: The 3D touch though is really good. It’s super easy to use.

Leo: I did want to ask you about that because I have to say I was very skeptical. Forced Touch on the Watch is not intuitive and kind of I’m not sure what’s going to happen. It’s even worse on the laptops because it’s just, it’s not consistent and you can’t really tell. But everybody who tried it on the phone said this 3D Touch actually works.

Ben: Yea. Well I think part of it is on the laptop you don’t have the immediate, you don’t have the direct feedback to your finger form the item.

Leo: You need the haptic feedback, yea.

Ben: Well it’s not just the haptic, it’s that you’re not touching the item. Like the abstraction of the touch pad makes it more difficult to pull off. I think the thing that is most impressive though, compared to the Watch in particular is that it always works on the phone. Like it, like it works every time. And what I think Apple is doing that’s smart about it, and I think Apple’s always been good about this, is that in contrast to say Microsoft for example. Is that they’re keeping all of the, at least for now and I hope they continue doing that, all the 3D touch interactions are just ways to do actions faster that you can do in traditional ways. And so because the issue is it’s kind of a hidden feature—

Leo: Right. But are you going to know—is it intuitive? Are you going to know what it’s going to do and kind of get it?

Ben: It seems pretty consistent especially when it comes to like peeking and things like that. But the point of the matter is if you don’t know how to do it, it won’t change the way you use the phone at all. But if you do know how to do it, there’s it makes certain aspects—

Leo: It speeds things up.

Ben: Absolutely. Absolutely. And I think—I was relatively skeptical as well but I was probably more. I was very, very impressed in actually using it in hand.

Ed: This is back to that conceptual point of view. Once you learn how it works you can extend it to other things. You learn it in one place, it works in other places. That has been historically Apple’s strength in terms of user interface design. You know, they may not be 1st, they may not be best, but they’re certainly most consistent.

Leo: Well I liken it to – to give Microsoft credit—right click. Right click, the contextual menu that popped up with right click was very quickly adopted by people. People got it right away and it was very much a power tool. You couldn’t do it on Mac because it was only one button.

Ben: What Microsoft got wrong about right click is there was things that you had to use right click for.

Leo: Yes.

Ben: And that was actually very difficult for especially novice users. 

Leo: Because they couldn’t find it.

Ben: Actually I think the Mac did right click better was because it was always optional and part it was forced because there was never two buttons on the laptops and stuff. But that meant that anything you put right click, it also had to be visible elsewhere in the UI. So if you didn’t know how to do right click, you would still, you could still access it. And I think this is a really critical point in UIs. The Watch, the problem for the Watch is when critical aspects of the UI are hidden, it’s a big problem. And that’s the case for the Watch.

Leo: It was the same problem for Windows 8. I want an intuitive user interface.

Ben: Well it was a huge problem. I mean one thing that was kind of shocking to us when it first launched was the, for like Windows 8 app you needed to swipe down on the top or bottom of the screen and that would actually bring in the controls. It was kind of frightening the number of people that launched the apps and never swiped the top or bottom. Like there was just no—

Leo: What’s the charms bar?

Rene: No affordance.

Leo: Where’s the charms bar?

Ben: Yea, affordance. That’s exactly right.

Leo: Yea. Well good so—

Ed: Well really, the word intuitive just—it’s a hot button.

Leo: Well, we’ve learned. We thought the remote control was intuitive in our home theatre.

Ed: Right. There’s no such thing as intuitive. There is, there is can you learn it quickly.

Leo: Right.

Ed: If you can learn the concept quickly and extend the concept to other things. That was the same thing with right click.

Leo: Right.

Ed: Right click wasn’t mandatory ever. It was, it was a way to quickly get to features that you otherwise had to go find menus for. And—

Rene: Interesting—I’m sorry.

Ed: That was the benefit of it.

Rene: Interesting thing here is that, I mean they’ve bene working on this for years. And they’ve been doing a lot of hardware work, a lot of interface work. And the idea is you have a single column view on the iPhone which is very different than on a computer with multiple windows or an iPad even with a split view. And it just wasn’t fast. Click the e-mail, go to the next screen and it’s the wrong e-mail. Go back. But now the phones are bigger and we talked about this a long time ago, Leo, but you can solve for one-handed ease of use in other ways than just having a small screen. And this is sort of the confluence of this where they’ve done a lot of work making sure that they clicks—and you can adjust the click. The 3D touch in settings. You can turn it off if you have for example physical impediments to using it. But if you don’t they’ve done a very good job of making it. So you press a little bit and you get a hint. It’s almost like a head shaking animation that tells you if there is something there. And if there’s not that sort of motion will open things in other apps so you start to discover it a little bit. Then you push a little bit and it gives you the preview which is called Peek. You press a little bit more and it commits to bringing it full screen which is called The Pop. And it has a lot like you can force swipe to go right to the multi-tasking interface. So there’s a back button now on iOS 9 for inside an app and there’s the force swipe to go back through the app stack. You can force, you can 3D Touch the keyboard to switch it to the trackpad like on the iPad on iOS 9. There’s a whole bunch of things that they just made super, super fast by virtue of implementing this thing. And what makes me so, what I find so cool about this is back in iOS 8 I said extensibility was going to be one of the biggest breathroughs Apple’s ever done. And I think I undersold it. Because so many of the new technologies from content blocker to video game recording to all these views that are being—they basically totally unbundled apps. Apps are not these discreet binaries that you arduously go and search for and find and launch. They’re these little bits of functionality that you pull down or press into or swipe up and little bits of apps are everywhere. And it makes the entire interface almost like it’s accelerated. It makes it so much faster to use.

Leo: I think I’m going to buy a new iPhone. You had me at back button actually. It’s funny because iOS users mocked Android mercilessly for the back button. It was one of the few features that made me move to Android.

Rene: Well this is subtly different. The Android back button always has 2 purposes: inside the app and outside the app. And Apple’s got 2 discreet actions. One for inside and one for outside.

Leo: Good. Maybe they’ve improved on it. I’m looking forward to it. 2 weeks we get it. Hey let’s take a break. We’ll wrap things up. Great panel. Great panel. So glad to have Rene Ritchie from Ben Thompson from Stratechery. If you’re not—by the way, I bought the, I subscribed. I finally gave in and said, “This guy’s too good. I have to pay for it.”

Rene: I’m a subscriber.

Leo: Yea, it’s really great. And there’s a lot of free content, including the articles we talked about.

Ben: Yea I do one free article a week in there and all the other 4 days a week is subscriber only. So I do write every day.

Ed: All of Ben’s good stuff is on Twitter though so that’s—

Leo: Yea, follow—everybody, every one of these three you should follow on Twitter. They are all Twitter mavens. Ed Bott, he’s @edbott and at Our show today brought to you by Squarespace. One of the people we got together with when I was in New York was the great folks at Squarespace. We had a great time talking. Just so impressive. These guys have such a commitment to making a better website for you. Build it beautiful is their tagline. And it really is true. They make it easy to have a website that reflects your style, your personality, is absolutely yours. Not cookie-cutter websites but they do it starting with these great designer templates. They’ve got e-commerce. They’ve got all sorts of stuff. The cover pages which allow you to have a front page. It has everything somebody needs to know about you. You could use it for a blog, for a website, if you’re a band they have band templates. An on-line store. Yes, they have e-commerce. Of course the best 24/7 customer support in the business. And they start at $8.00 a month when you sign up for a year. By the way every Squarespace site looks great on all sized screens. That’s more and more important. Squarespace is now offering $100 in ad words credit if you sign up for the business or commerce plan. I can go on and on but really the best thing about Squarespace is you just go to, click the get started button. Without a credit card or any personal information you’ve got 2 weeks with the Squarespace site. You’ve got your run of the place. You can do all this stuff. You can even import content from your old site to see how that would look. That’s free. So you can absolutely try it before you buy. Take a look at the great Squarespace apps too. They’ve done some beautiful apps. Stats, everything you need. Start your free trial. No credit card required. But when you buy, I want you to use the offer code TWIT because that does 2 things. It lets them know that you saw this on TWIT. We like that. And you get 10% off. 10% off. Squarespace. See that, the blog, the metrics, the portfolio, the note. Those are all apps. They’re great. Squarespace. Build it beautiful at Before we move on, anything else any of you want to say about the Apple event? There’s quite a lot there. It was a 2 and a half hour event. Almost as long as this show. And they I think in many ways kind of put a stake in the ground for some very interesting new stuff. Anything you want to say about that? Are we good?

Ed: Geez, Leo. I think we’ve—

Leo: We’ve really, we’ve beaten it to death.

Rene: We’ve gone longer than any other time.

Leo: We did.

Ed: But you teased something earlier though that you thought was the most revolutionary thing. That you thought we were going to like guess.

Leo: The iPad Pro.

Ben: It was the iPad Pro.

Leo: That’s what I meant. I really feel like the iPad Pro is a breakthrough. And I know a lot of people think I’m nuts. 

Rene: Those speakers are—we didn’t talk about that, Leo. Those speakers are amazing.

Leo: 4 speakers.

Rene: You can turn the thing. Yea, and they go as fast as the reorientation of the apps. So you’re looking at something, you turn it sidewise, those speakers take over. Everything rebalances.

Leo: Why? Why would you put 4 speakers in and not put a better camera in. I don’t understand what they’re doing.

Rene: And so I mean I think that the idea of someone standing there with this camera to them is not as realistic as someone watching Avengers: Age of Voltron and having your hair blown back.

Leo: You know what? Real people use the iPad for a camera. I see it all the time.

Rene: Me too. But I think those people I think are—those people if they’re using iPad for the camera, the mega-pixel count of the camera is not the most important thing to them.

Leo: Although I got to say. Please do not use an iPad Pro to take pictures (laughing).

Rene: If I wanted to shoot 4K, Leo, you know what kind of a view finder that would be? That would be the best viewfinder ever.

Leo: Yea.

Ed: I just thought, I just want you know from when Rene just said “those people.” I want that clip from Tropic Thunder. You people.

Leo: You people.

Ed: You people.

Rene: Well I’m one of them. I use the iPad to shoot everything at CES this year.

Leo: Real quickly, cyber-attack exposes 10 million records of U.S. health insurer Excellus. I think they’re a Blue Cross, they’re blue something. 

Ben: Blue Cross Blue Shield.

Leo: Blue Shield? We’ve heard this so many times. Is there a story here?

Ed: Nope.

Leo: We’re screwed.

Rene: Security’s hard. Security’s hard.

Leo: We’re screwed. Chris Sacca says, “Everybody I talk to, all the biggest Twitter investors want Jack Dorsey to be CEO.” Jack’s already said, “I’m too busy.” They continue—

Ben: I don’t buy that. I think that Vanity Fair article where that says that he turned it down, I don’t buy that. I suspect what it was was the board offered it to him conditional on him stepping down from Square and he turned that down. Because—

Leo: Ah. That’s his company and he wants to keep doing it.

Ben: I suspect he’s holding out to do both.

Leo: By the way that article also said that the board calls Chris Sacca the Unibomber. Because he—

Ben: Well, they need it. The—as I noted on Twitter to your point earlier, I mean the surprising thing would have been a fast and neat and clean CEO search. That’s not the Twitter we know and love.

Leo: (Laughing) it’s a hot mess. Twitter. It’s a hot mess.

Ed: And we love that about them.

Ben: And it is.

Ed: It’s a dog’s breakfast.

Leo: A dog’s breakfast.

Ed: A dog’s breakfast.

Leo: And yet, we can’t live without it. It’s the dial tone of the internet. I’m a little disappointed— huh?

Ed: It’s the new RSS.

Leo: Yea, I guess it’s kind of like that. I don’t think that’s a good thing to say, but.

Rene: Well it kind of is RSS just—

Leo: Yea. It’s out of control. It’s RSS if we’re out of control. And like cancer.

Ed: The R is for random. The R is for random, Leo.

Leo: Random, yes.

Ed: Yes.

Leo: GoPro which announced it was going to do a multi-camera virtual reality camera says, “Yea it’s coming out in November.” It’s $15,000. Oh, man.

Rene: Alex has ordered 3 of them. Do you want to bet?

Leo: Oh man. I did the calculations and I thought, “Well, if it’s got 16 GoPro’s in it, it shouldn’t be more than $6,000.” I guess I was wrong.

Rene: Tape.

Leo: It’s expensive to glue it together. You know I’m going to buy this Theta S. I figure—so this is the 3D, the Ricoh 3D camera that you just hold and it just—you shoot video that’s completely surround video. It’s only a couple hundred bucks. And I’m going to stream that to YouTube. And then—I figured it all out. I’m just going to be here doing a blog and then on the other side of me there’s going to be a bunch of crazy people, you know, naked dancing and stuff. It will be like, I’ll have Burning Man on one side. But unless you turn around you won’t notice.

Ed: We are all Roland Hedley now, you know.

Leo: Yes. Doonesbury, another old man reference. The Doonesbury character who wore all the…

Rene: Where’s our 3D Periscope?

Leo: Oh, I love this. Yes, 3D Periscope. Amazon finally stopped selling the Fire Phone. Somebody in the chatroom said, “I bought—“

Rene: They stopped selling it a long time ago.

Leo: “I bought it—.” No. There’s a guy in the chatroom that bought it the day before they stopped selling it. Nice timing.

Ed: I’ve got one. Mine’s a collector’s item now. I’m really happy about that.

Leo: I gave mine to Dvorak. I thought that was a good use of it.

Ed: Oh, you’re cruel.

Rene: It reminds me of a world where—

Ben: Right I think he’ll find lots of good use of it.

Rene: It reminds me of a world—the difference between, between Amazon and Apple where you know, a lot of times Steve Jobs wouldn’t get his way. And Jeff Bezos got his way with the Fire Phone. There weren’t enough people there to say, “Oh, no, no. This is a terrible idea. We’re going to do this, this and this and not this.” And he would curse at them, go off, say they’re all going to fail and then he’d fire them. But then it would work out and everyone would be fine. So you always need those people to tell you no.

Ben: To his credit though, and to Amazon’s credit, they learned from their mistake. And they’re not trying to do version 2 and they’re like—I mean the issue is that Amazon is a horizontal services company that needs to be reaching people on every platform not trying to own the one. And yes, you’re right, it should never had been made in the 1st place. Probably all of us, definitely including myself were saying it was a bad idea from the beginning. But, that said, if you’re going to do the wrong thing at least learn from it and change going forward. And they have been to their credit.

Leo: Look at Microsoft. They made the Cannon and then they realized oh, no, no, Windows Phone is the way.

Rene: And then 7 was the way. And then 8. Now 10.

Ben: Well you know, that’s why Nadella deserves credit.

Leo: He does.

Ben: Because it was important that Microsoft was at that event. And it was important because what matters to Microsoft is not Windows. What matters to Microsoft is that Windows is now—when Windows was the market, Microsoft—the great thing about a monopoly is you don’t need—I talk about that whole distinction before about being a scale offering or being like a niche offering—when you’re a monopoly you get to be both. Like it’s life’s very easy. And so Microsoft never had to make these kind of trade off decisions. Are we going to be focused on a vertical area or are we going to focus on a horizontal scale play? And now they do have to make those decisions because Windows is no longer the whole thing. 

Leo: That’s a great point.

Ben: They only have part of the market. And Microsoft by nature and by business model and by history is a scale company. They’re a horizontal platform sort of company. Which means they needed to abandon Windows. I mean yes, Windows is still being produced and things but it’s clearly off in its corner. And it’s doing its thing. And the focus of the company and all their growth is on platforms that are on Windows, that are on iOS and on Android and on the web. And that’s exactly right, exactly what they should be doing. Doesn’t mean they’re going to necessarily succeed. They have a lot of challenges in front of them but at least they are finally now going down the right road and you know, I have great respect and admiration for Nadella for having done that. And on the flip side that was my big contention and problem with Steve Ballmer was he conflated what Windows with Microsoft and that was to, that led to a lot of blind spots.

Leo: Ed Bott—

Rene: Mistake his product for his business.

Leo: Ed Bott, have you ever met John McAfee? 

Ed: I have not. Boy, that’s one of the great, great you know, things on my bucket list. I would fly. I would fly 5,000 miles.

Leo: (Laughing) I would too.

Ed: To smoke a doobie with John McAfee.

Leo: Apparently the new criteria for running for president of the United States is, “All my friends said I should.” That’s what he said. He’s going to run for president in 2016. He’s got his own party. The Cyber Party. He decided to run after being encouraged by almost everyone he knows and meets. “I have a huge underground following on the web,” said McAfee. “I promise you I will win because I have the votes,” despite his DUI and gun possession.

Ed: McAfee / Kanye 2020, baby.

Leo: Kanye’s running in 2020. I think maybe, yea. 

Ed: He’s just setting up for the 2020 run.

Ben: Wasn’t he set to run in South America or something like that?

Ed: McAfee and Kanye. You know, you get those two together it’s basically unstoppable. It is literally viral marketing.

Leo: Didn’t he also say that, ”If I’m elected one month afterwards I’ll resign?”

Rene: I’ll have the spare room ready for any of you that want to move north at any time.

Ed: The entire country is becoming and AirBNB.

Leo: Don’t make me, don’t make me show the Rob Ford Video.

Ed: Do not, please.

Rene: I didn’t say Toronto. I didn’t say Toronto.

Leo: (Laughing) That’s Rene Ritchie, It’s always a pleasure. I’ll see you back here Tuesday. We’ll talk more about Apple. We didn’t really talk as much as we wanted to, so.

Rene: We touched on it.

Leo: MacBreak—a little bit we touched on it. MacBreak Weekly Tuesdays. You know what, we should just do a whole Microsoft show on MacBreak Weekly I think.

Rene: We do, Leo. We do Google and Microsoft.

Leo: We talk about Android all the time. I know. Trust me.

Ed: I’m there. You know you guys, I’m there when you’re ready. Just—

Leo: When you’re ready for Windows, Ed Bott is there. Ed, it’s great. Ed, where are you going on vacation?

Ed: South America.

Leo: Nice.

Ed: We’re going to Machu Picchu.

Leo: I’ve been to Machu Picchu. It’s an amazing thing. Everybody should get to go.

Ed: Yea, it’s a, it’s definitely a trip of a lifetime. So we’re going to Machu Picchu and we’re going to be off the grid.

Leo: Yes. Actually not really. I was the mayor of Machu Picchu on Foursquare for many months. I kid you not. Didn’t take many check-ins. Just a couple. And suddenly I’m the mayor of Machu Picchu. Something no one will remember.

Ed: Leo, I now have a, I now have a purpose in life (laughing).

Leo: Now you can use Swarm. You can become. So you are able to get online there. I’m just saying. Have a great trip. It’s an amazing thing to see Machu Picchu. Allow as many days as you can. And you seem like the athletic type. You might want to try the old Inca trail to get there.

Ed: Yea, I’m going for the pizza.

Leo: Yea. Great pizza in Machu Picchu. I often ask, “Why can’t California have pizza as good as Machu Picchu?”

Ed: See?

Leo: And we’re obviously joking. It’s Ben Thompson, who is in Taiwan and he joins us through the grace of God and the courtesy of the Chinese internet. We thank you so much for being here.

Ben: No, no, no, no.

Leo: I know, I know. I like to do that at least once per show.

Ben: I have no great firewall to contend with.

Leo: No great firewall there.

Ben: No, my internet is better than all your guys’ internet.

Leo: It is. What a rock solid picture and you sound great on the High LPR40. Did we send you that or did you just buy that on your own?

Ben: No, I think you sent it to me last year. It was great.

Leo: You sound great. Always a pleasure. And if you do not yet subscribe to Stratechery, do.

Ben: Yes as I was saying, there are free articles so don’t be turned away by that.

Leo: No there’s great reading. And fabulous illustrations which are only going to get better with the new pencil.

Rene: Content blocker does not stop his illustrations.

Ben: It was all a master plan by using illustrations and then starting a website and making money from it, I am now able to write off the cost of an iPad Pro so my long years of planning have come to fruition.

Leo: Amazing. Thank you for getting up early and joining us. Thank you all for being here. What a fun show. I just, I just love the brain power in here. We do this show every Sunday afternoon. 3:00 PM Pacific, 6:00 Eastern time, 2200 UTC. If you can join us live that would be great. You can be in the studio if you e-mail And we subjected a goodly number of people today to an event as long as the Apple event. So and we covered pretty much everything in the same obsessive detail as Tim Cook and Company. If you want to be here, Of course you could always watch all of our shows on demand after the fact. On our website or wherever podcasts are aggregated. And that is pretty much everywhere including iTunes, the Xbox—I’m sorry, it’s called Groove for now. Groove Music and all those other great places. Plus the apps we have on every platform including the Roku. Thanks for joining us. Hey, I’ll see you next time! Another TWiT is in the can. Bye-bye.



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