This Week in Tech 574
Leo Laporte: It's time for TWiT, This Week in Tech! Philip Elmer DeWitt, the cranky geek episode. Philip Elmer DeWitt, Om Malik, and David Coursey join me. We're going to talk about the five horsemen of the Internet, who will Microsoft, Apple, Facebook, and Amazon. We'll also talk about the fact that Wall Mart buys jet.com. Amazon responds by buying jets, and a lot more. It's all coming up next, on TWiT.
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Leo: This is TWiT, This Week in Tech, episode 574, recorded Sunday, August 7, 2016.
Headless Body in Topless Bar
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It's time for TWiT, This Week in Tech, the show where we cover the latest tech news. This is going to be the cranky geeks edition. Three of my favorite TWiT contributors joining us at the round table. Philip Elmer DeWitt a refugee from Fortune. I was going to call you a fortunate refugee, but I guess that's not quite the same.
Philip Elmer DeWitt: And Time Magazine!
Leo: And Time. He has now got Ped30.com.
Philip: Or Apple 3.0.
Leo: That's the official name. And It's all about Apple. How's it going? Going well?
Philip: Yeah. It's a lot of fun. I have the freedom to leave town whenever I want to. We can talk about that later.
Leo: There's a lot to be said for that. There may be even more to be said for that in November. Meanwhile, joining us to my right, we got Om Malik. Always great to have Om, formerly of GigaOm, now an Angel investor, and I'm happy to say joining the podcast family at Pi.co.
Om Malik: Thank you, Leo, for having me again. I'm actually a professional investor at trueventures. Not an angel.
Leo: You're the real deal. You've got money to burn.
Om: Not really.
Leo: That's great. You were an angel for a long time, right?
Om: No. Never was an Angel.
Leo: Never early stage? You were always..
Om: No. I just went professional.
Leo: Went Pro, at a young age. You dropped out of college to go Pro. We'll find out more about Pico in a little bit. Also joining us, my old buddy, David Coursey. David is @coursey.com.
David Coursey: I have nothing to sell anyone.
Leo: Isn't that nice?
David: I don't have a blog for you to read, I don't have a podcast, I have nothing. I'm just here.
Leo: That means you're here for the love.
David: The love of technology and the love of the affable Leo Laporte.
Leo: Thank you.
Philip: And the free mic, we hope.
Leo: He's lobbying for a free mic. Before the show began, he said, "How many times do you have to appear on the show to get the PR 40?" David, we'll get you one right away.
David: Hey, Om has one, I figured...
Leo: Fair enough. Let's start with the sad stories. Actually, a really shocking sad story. Earlier this week, the man you founded Sling Box, Blake Krikorian, who was much beloved in Silicon Valley, passed away suddenly at the age of 48. He was surfing. Om, you were a friend, you knew him.
Om: I did. I was quite shocked by his passing, and I think Blake and I met not too long ago. 2004 when he was doing Sling media. He had just started Sling Media a few months, at least that's what he told me. Talked a little bit about what comes after Tivo and we talked about place shifting. Just became friends, I think your editors tell you not to become friends with your sources, and in this case, I knew he was going to be a friend before he was a source. That's how our lives turned out to be. When I got sick, I had my own heart condition, and Blake would come pretty often and spend hours at length with me, he would keep me company sitting in a Starbucks talking about Tech and we would gossip about things and what the future looked like. That's what he was. A guy who gave everyone everything he had. He just was one of the good guys. He was an engineer. Software, hardware, he could do it all. In 2004, he made place shifting happen. This is a world before APIs and Internet connectivity which is pervasive and cheap computers and cheap processors. This guy hacked it all together. It takes a very special person to do that, and he was. He was the old school Silicon Valley guy, which was the value system was not only to win yourself, but do it with technology and do it with others, and always help others. This guy just helped everyone, I don't think he ever had a negative thing to say about anyone. He would basically give you the shirt off his back if he felt you could benefit from it. Really great guy and we became good friends and he actually got very mad at me for leaving journalism, and he said "why would you do that?" I think sometimes other people know you better than you do, he was one of those people. A really special human being. It took me two days to come to terms with the whole thing.
Leo: It's such a shock, at that age.
Om: What a loss it is for the community, his family, everybody. He's truly one of the great ones.
Leo: He will be missed. His family leaves behind two daughters and a wife. I don't know how old his daughters are, but given his age, they're probably not very old. Even greater tragedy.
Om: I just would say, they don't make people like him anymore. I've been around People like you and Philip and David for a very long time, this is the old school, capable, very capable person.
Leo: Yeah. We need more engineers running companies, if you ask me. People with technology backgrounds, also passing this week, at a little bit more of a senior age, Seymour Papert. He was 88, he invented Logo. If you ever used Lego Minestorms, Minestorms were named after his seminal book, Minestorm: Children, Computers, and Powerful Ideas, he was a genius in the early days of AI, and very inspirational. You knew him, Philip, right?
Philip: I worked with him. Our careers crossed a couple times. He was one of the giants. He was a student of Jean Piaget, the French psychologist who first mapped out how children learned. How the brain developed, when children were ready for certain ideas, and when they weren't. Piaget said Papert was the only student who really understood the theory. Then Papert, he was a South African. He came to MIT and was very influential in helping Marvin Minskey develop the early ideas about AI. He and Marvin started the TAI lab. By the time, I was just a kid, basically a paid intern when Papert was there developing Logo. He had this idealistic idea that this computer language was a baby version of List, with a lot of powerful tools, recursion. That was the main thing. It's a recursive language, and everything was done recursively. It would have been... he had this idea that if you give kids Logo and they just play with it, they learn by playing, by... he compared it to how an art class, kids play with clay and work it until they get something they really like. He said that this is how mathematicians enjoy mathematics, but it's not at all how math is taught in school. Anyway, Logo was a great idea. He tried to push it into schools, but Basic, which was a pretty ugly language, full of problems, and that's the one that got taught. It was a very sad story to watch. It was like watching the PC take over the computer industry and the Macs.
Leo: I'm sorry, that was a little video. I was going to show some Turtle graphics, which many people watching this had Turtle graphics in their grade schools. He had a little Turtle with a pen attached, and the idea was, this is onscreen Turtle Graphics, but the idea was... if you'll look at this, you'll recognize... there you go. You'll recognize small talk language, but the app inventor from Google, which was later taken over by MIT, which is a very easy way to program for Android is also this same drag and drop socketed language. This is Scratch we're looking at, and this is Turtle graphics and Scratch. Scratch is essentially a small talk language. This is a whole movement that you're right. It's sad, Philip, that we got side tracked by... went in the wrong direction and we're still paying the price for it. But many kids learned Logo at school. I don't think they teach it anymore, but it sure would be a good thing to bring back.
Philip: He was a real gentle soul. He got badly hurt in a traffic accident. I think he got hit by a truck or something, so he's been out of it for some time. Not quite the same story.
Leo: Anyway, hate to begin with obituaries, but there were some reasons to do that. There is still, I guess if you want to get your kids into Turtle Graphics, there's Turtleacademy.com, where you can still learn programming using Logo and Turtle Graphics, and you don't have to be in school to do it. That's the one thing I have to say that is going well in this world. If you are motivated, you can learn anything you want online. Including languages that have long been deprecated because Basic won. As long as we're talking, Philip, let's talk about Apple a little bit. Radar got bought by Sam Bifford in The Verge, which many people have said for years is a pro-Apple blog, but in this case, in his first column, Sam says Apple should stop selling four year old computers. One thousand five hundred fourteen days, four years, one month and twenty four days since Apple released the last Macbook Pro without a retina display. It's been two years for a Mac Mini. If you go to the Mac rumors site where you can decide whether or not you should buy a Mac, it says do not buy on every single Mac except the MacBook because they're way overdo. The retina Macbook Pro is 442 days old. The Mac Mini is 657 days old.
Philip: This is the story that really hits computer writers where it hurts.
Leo: It's over, baby! Time to give up.
Philip: We're the ones who use these machines, and you hear people bitching on podcasts all over the Internet. Apple, it's making its money on the iPhone. That's how Wall Street judges the company, based on the iPhone. It is not in the business of doing what the computer writers want for their desktops. It has the money. What it lacks is the engineers. They don't have many people who can make this stuff, so they're off making other things. Something will get updated this fall.
Leo: Om, you're one of the people who thinks an iPad Pro is the next computer. You don't need a Macbook.
Om: I opened my Macbook Pro today after ten days, mostly because I have to get on this podcast.
Leo: It's our fault. I'm going to make you use a computer, whether you like it or not!
Om: There's still a lot of things you can't do with the iPad, which is podcasts and stuff like that. If I was doing this on my own, I would happily use that.
Leo: We make you use Skype, but you could easily...
Om: I use my iPad for putting... I added my photos. It just is easier to use, I think people get caught up. I don't have to worry about viruses, I don't have to worry about it crashing on me all the time, any of those things. It just does a good job for me, and for me, that's fairly good. I do need a new computer. I would love to have a new MacBook pro so I can edit my photos. I do have a four year old MacBook Pro and the thing starts levitating every time I open Photoshop. I'm not really sure what to do about that. I would say, I would be happy to stop thinking about computers from the way they were in the past. We have to think about what they can be in the future. That's the most important thing.
Leo: David, is it just nostalgia that makes people sad about losing computers?
David: I wonder what it is that we need to do that we can't already do. I have a very old Macintosh and I had to really clean it up to get it going fast again, but there's not that much that I need to do that machine won't do. Not having a machine that is obsolescent every year or two years is a wonderful thing. What is Macintosh going to do that it doesn't do today? Yes, it could be faster, yes it could be this. Yes you could put more memory in it. But the applications aren't driving it to need a whole lot more.
Leo: For the first 30 years of the computer revolution, hardware was trying to keep up with these massively bloated graphical operating systems, but it's caught up. It's fast enough, it's been fast enough for years. It's not that we have to have a new computer, maybe we just want a new computer.
Philip: Apple probably wants to remove a few ports.
Leo: That's the other thing. I don't know what this is going to become the fall. We're only a few months off from an Apple iPhone announcement. We're close enough now that the rumor mill coming out of the suppliers in China is probably pretty accurate. I think it's safe to say that at least one of the new iPhones will not have the antiquated, obsolete, who needs it headphone port.
Philip: You'd think this would not be a good quarter for apple to make an iPhone that will turn people off with one of their big selling features. What are you looking for?
Leo: Your face stopped moving. I was just worried if you had a stroke or something talking somehow. Then I had to look because neither david nor Om were moving much. Obviously intent on what you're saying. They were blinking at least, you were not.
David: I use the headphone jack on my iPhone almost every night.
Leo: Yeah. I don't think this is obsolete.
Philip: There's been so much written about it...
Leo: Here's Nilai Patel's article about from a few weeks ago. "Taking the headphone jack off phones is user-hostile and stupid."
Om: Can I just bring one point to this debate about the headphone jack? Remember how much you complained about the floppies and the USBs?
Leo: That's John Gruber's defense. He says Apple is good at this.
Om: I think this is what they do. They try to push the envelope a little bit... in my opinion it's their prerogative. If you don't like you can switch to Android or whatever else is out there.
Leo: That's my question. I wonder if Apple will for the first time ever... they're seeing drops in sales. A significant drop in iPhone use, because I think consumers want headphone ports. You're wearing headphones right now! You're wearing the white headphones that came with your iPhone!
Om: I will wear the different ones when they come out!
Leo: They won't work though, because they'll be lightening jack, and they won't work...
Om: Or I will use the wireless headphones which I can buy. I think it's a wrong reason to be debating around Apple. I think there's a lot of other problems there.
Leo: I'm just piling on. This is...
Philip: No one can figure out why they're doing it this year, why they're taking the jack off this year. Gruber's theory is there's something they're doing for their ten year anniversary iPhone. That's next year, not this one. For some reason, that one doesn't want to have the usual jack, so they're warming people up for it. As he put it, they're going to eat the S*** burger with this phone and clean up with the one afterwards.
Leo: That's risky. This is your product at this point. You're not updating the computers, the iPad sales have tanked. Watch isn't going anywhere. Your product is an iPhone.
Philip: It's a bold move. Maybe a really stupid move. It feels a little bit like a Johnny Ive design driven thing, rather than marketing.
Leo: How about this? Our friend Steve Gibson at Security Now came up with a really interesting theory that if you're going to take away the iPhone, Apple on September whatever is going to have to say something more than it makes it thinner or gives us more room for a battery. It's going to have to give us some value in return for losing the iPhone jack. Steve says because you're now connecting your headphones to the lightening adapter you can now do more with that headphone for instance, what if Apple started selling noise canceling headphones? What if all the ear buds that came with your iPhone did noise canceling, sophisticated noise canceling because you've got a processor, and you've got a data port as well as a headphone port? If they did that, look how much Bows gets for those quiet comfort headphones? If they announced that and said, "hey, this is part of it." If their earphones are going to be the ultimate wearable, I thin. We don't want to get rid of them. When you wear them, what this thing can do in your ear is do a lot more than give you sound. It can measure your blood pressure, your oxygen level. Of course it can measure your heart rate. The ear canal is a really good place for medical wearables. Might be another additional feature app.
Philip: They're all going to cost more though. And they're all going to need to be re-charged overnight. I guess it depends on what Apple gives us in the way of...
Leo: That's the point. You don't have to re-charge them because the phone has a battery.
Philip: I'm thinking of the wireless ones.
Leo: I don't think wireless is where we're going. I interviewed David Hansen on Monday, and he said this is great. Who wears wired headphones? I want all those years back that I spent untangling my headphones. I don't know. Is the world ready? Is that where we're going? Wireless?
Philip: I have to assume that's what Apple is planning. I don't know if it happens this year, and I don't think they're going to give it away, because those things are expensive.
Leo: The cynic's answer is you can't license the mini jack. You sure as hell can license a lightening port, and with that comes license revenues. Who wants to take a shot at Apple? Anybody? I'll give you something wrong with Apple. Here they go, replacing a perfectly good gun emoji with a squirt gun! What the hell is wrong with these people?
Philip: I'm sure it comes out of political correctness or some version of that. But I love the little twist that because it's a squirt gun on the Apple apps, but on everybody else's app it's a real gun. Somebody had a neat graphic that showed them all at once. They can say, "Come to the water party and bring your squirtgun." But everybody else's app it shows up as a pistol.
Leo: This is emoji-pedia, it's a really great website that explains what emojis mean. They actually raised a great issue. I thought that's great. Why should we have gun emojis? How about a toy gun emoji. That's good. But this is a communications medium, and when you say 2 PM tomorrow, local park, bring it, and you put a squirt gun on iOS 10, by the way it's not going to be IOS 9 right now, it's in IOS10 coming, it may look like you have a different agenda when you see it on Android or Windows phone or Samsung phone. That's a good point.
David: Are we saying Apple users will ultimately be out-gunned?
Leo: They brought a squirt gun to a knife fight!
David: Come to the NRA picnic! Apple users, bring your squirt gun. I can see that, yeah.
Philip: You know what I love? You wanted to talk about Planet of the apps.
Leo: I do want to talk about this, yeah.
Philip: That holds no appeal for me.
Leo: I don't like reality shows in general, but this is Apple's new language.
Philip: What I do like is they bought an exclusive on carpool karaoke, which I had only heard about the day before because Michelle Obama was in it. Do you know this show?
Leo: It wasn't a show It was James Cordon. Late night show. It's been wonderful. It's actually the only good thing on the show, I'm not a huge fan of the show. But he gets in the car, and famous people join him, and it's always fun.
Philip: Apple has bought exclusive rights, and they're going to put it on Apple music.
Leo: What do you mean he's leaving? He's not going to do it anymore?
David: He's not going to host it any more. They're looking for a host.
Leo: That's terrible because the whole point of carpool karaoke is that he is a very accomplished singer, and funny! I think they're spinning it out into a TV series and Apple buys it. Now that doesn't mean... that means if you want to watch it you'll have to get it on iTunes. Right? It's really been the single thing, this has been the great social media viral part of the show. It's the only reason I know about the show.
Philip: He's almost hit a billion views on YouTube.
Leo: Here he is, trying to talk his way into the White House.
James Cordon: Back up, let me give you my license.
Guard: Sir, do not back up. Put your car in drive, pull off to the right up there, please. I'll give you further instructions once you get up there.
James: I should not do touristy things.
Leo: He is quite funny, of course, but then eventually the first lady gets in the car.
Michelle Obama: We were making honey there.
Leo: I want to see them singing. Let's see them singing. This is now, by the way... you got to give credit to Jerry Seinfeld about his breakthrough on podcast comedians and cars getting coffee. Even before that, you got to give credit to a good friend on the show, who plays the rubber faced robot on red dwarf, Crighton. Bobby used to... in fact I was in Bobby's podcast, he'd go around countries in his electric car, pick up people, and interview them in the car. He discovered, it was quite right about people if they're driving in a car together, they're just more relaxed. Robert Lewellen is the guy who invented this whole thing. He didn't sing. But he should get some credit for inventing this. But let's go back to the Planet of the apps, which no one can argue is the best name for a television show ever. You're going to argue with me?
Philip: If you like or care about app developers.
Leo: It's a reality show. That's my biggest problem with it, this is going to completely mis-represent the thrill of being an app developer. The judges of this will be Gwyneth Paltrow, because she has a child named Apple. Will I am, because he once was famous as a rap artist. And get this, Gary Veinerchuck. You don't know who Gary V. is, but he is a podcaster. He is best known for wine library Tv. Good friend. Gary was a wine seller who created a podcast about wine, but then turned it into a massive book deal and a huge business helping people do digital media.
David: He had a class on how to develop your own personal brand.
Leo: He's the king of it. Let me tell you.
David: That's why we had all immediately heard of him.
Leo: Nobody knows who he is! Isn't that funny?
Om: I do know him. I think this is where... you were asking me what is the problem with Apple. Not the lightening boat. This stupidity of building a TV show around apps. It's ilke somebody needs to make friends in Hollywood, so we should do a show like this. This is such nonsense. They should be building better products and not stupid TV shows. If you want to do something for the shareholders, make interesting Macbooks which people can buy. You want to do something nice? Make a better phone, which people will want to keep buying. Nobody cares if you do Planet of the apps. This is coming from the so-called celebrity influx into the company. You look at Eddie Q, the guy was hanging out at the playoffs when iCloud was burning for six hours. He wouldn't have survived a day if Steve was around. I'm sorry, that's what gets me worked about this company. They have all these wrong priorities. They want to do entertainment content? Buy Netflix and move on from it. Do it properly if you want to do it. Don't try to do the stupid stuff which adds no value to the company. Absolutely none. I'm sorry, this is where I see this company going wrong.
Leo: I agree 100%. Preach!
Philip: To me it feels a bit like Jimmy Iovine.
Leo: It's the Hollywood connection. Apple could say it's part of a strategic plan for us to make Apple TV more valuable. Clearly Apple sees its future in services, because they started to make money there as the hardware declines, frankly, the service is starting to become a multi-billion dollar business, so what they see themselves as I would guess, I'm just looking at them, is some sort of content/services company.
Om: How about building a search engine? I think just focusing on all these wrong things is the problem. I think that's the bigger issue with the company than anything else. You need better computing intelligence to make a better shopping experience for people on the app store. Not planet of the apps. Do I give a s*** about Gwyneth Paltrow and her taste? I don't. That's an old way of thinking about how people discover things and how people do things. This company just desperately needs a fresh infusion of thinking. I'm not a big fan of this whole Jimmy Iovine thinking that we will do this hand quartered playlist, and we it's going to all be done by hand. All those things are nice, but in the end, they just need to build systems of tomorrow, not just keep doing things of today. I really think that this is a big challenge for the company. Nobody seems to call them out on it any more.
Leo: I couldn't agree more. When we come back, let's talk about the challenge that not just Apple, but all tech companies face of stagnation, of the business cycle, which seems to be accelerated. What does Apple do? How does Apple stay relevant? How do they find new markets? Everybody is dealing with this. Google is doing it. Microsoft is re-invented itself. I think this is a fascinating subject. We got a great panel to do it. David Coursey is here from nowhere. He's just coursey.com.
David: I'm nowhere.
Leo: He's just nowheresville. He's in Tracy. That's where he is. But we love him, and he brings a unique perspective to the party. As does Om Malik. Giga Om, and now at Om.co and pi.co. Is it omco?
Leo: Om.co. Pi.co. But it's pronounced pico. You see the problem. I love it. He owns the co registery. Philip Elmer DeWitt, who has left the trades. He's now part of the digital world at ped30.com. It's great to have all three of you. We'll continue the conversation in a moment, but first a word from our sponsor WealthFront. You all face this issue, we all do. We got to save for long term savings for the retirement for the kid's college fund, for that house. You got to be saving money. How are you going to save money? Throw it in a mattress? No. Put it in a savings account? You need growth. How are you going to do it? Well, a lot of people invest. There's a lot of growth there, but there's a lot of work there. You got to pay attention to your investment, so maybe you hire a broker. They cost between 1 and 3% of what they manage every year, not to mention some secret, hidden transaction fees. Half the time, they're making money on the side because they're selling you something and you're getting a commission for it. Computers have changed everything. I know that the brokerages are scared of Wealthfront, because i see articles all the time. Wealthfront doesn't charge you 1, 2, or 3% of the money under management, they charge 1 quarter of one percent a year. 25 basis points. Less than anybody. Zero commissions, no hidden fees. That's because computers! The computer is doing all the work for you. The computer has another advantage. It can constantly monitor your investment, re-balance your portfolio, do sophisticated things like tax harvesting, all in your behalf at a very low cost. Now computer programs have to be well written. Look at the people who are behind this. Some of the smartest people, they went out and got an advisory board of people like Britain Malkial, Charles D Ellis who wrote a classic. They've got between two hundred years of combined investment experience. 7 PHDs, Nobel prize winning academic research, the best investment practices, and it does a great job. That's really what matters. I'll tell you what. If you want to find out more, you don't have to invest right away. They've got some free services, you can try wealthfront.com/twit, answer a few simple questions about your time frame, your risk aversion, and they will generate a sample portfolio, that's yours to keep. You can also take your current portfolio and current investments, and they'll give you some idea of how well diversified it is, how much risk it is, what you're losing to fees, how you can minimize your taxes on your current stuff. Wealthfront.com. They just introduced their 529 college savings plan too, which is like a Roth IRA for higher education expenses for your kids or grandkids. Wealthfront is growing fast, over 3 billion dollars in client assets under management. Many of you TWiT fans have been trying it. I get emails all the time. Go there right now, find out more, and the minimum investment is just 500 dollas, so it's easy to dip your toe in. Listening this, if you do sign with investment Wealthfront, your first 15,000 dollars will be managed not for 1,2, or 3% a year, not even for 1 quarter, but free forever. For life. Great way to start your nest egg. Wealthfront.com/TWiT. It is really a great solution. We're talking about Apple right now. We'll move on and talk about some other topics. But really this is a topic that all of the mature tech companies are facing today is how do you continue to innovate? It's the Innovator's dilemma. We've known about it for years. Isn't that all Apple is trying to do is find the next big thing? Shouldn't they be praised for going beyond thinking "what's the next computer or phone or iPad or doohickey?" Maybe our future is in services. Isn't that what Microsoft decided?
Om: Funny enough. I'm writing a piece about this for the New Yorker. Hopefully tomorrow or the day after. What I'm talking about is essentially if you look at the top five companies, there's a gap right now. They are Apple, Google, Microsoft, Amazon, and Facebook. That's the five largest companies by market cap. What the stock market is saying is that they believe in the protection of these companies, they believe in the growth. These companies will have despite their mega sizes, with the exception of Apple, which is having a down year, you see the other--Google, Amazon and Facebook are having high double digit growths in revenue terms and even from a profit standpoint. There is much less of an issue around these companies. The reason I was talking about Apple trying to focus, I need to focus using data on where the opportunities are instead of doing things like Planet of the Apps is from that story. I think these companies have mega platforms. Apple has services, which is growing really fast. It's almost 6 billion dollars a quarter business now. They have a lot of opportunities to capture, but they need to be focused in order to capture the opportunities. Do you think people will search less next year or the year after? Or they'll look for less information next year? Probably not. Will people be less social next year? Probably not. Facebook, Google, Apple, Amazon, Microsoft. None of these companies get less valuable. I think the big growth curve is actually in front of them, as long as they're focused. I think this is why companies like Apple need to get more focused. Microsoft has decided to focus on Cloud and Cloud related services, and you're going to start to see them transition their own enterprising businesses and make money off it. They're taking productivity and turning it into how does the world work in the future? So they have clearly figured out what's the way forward? It may take them some time to get there, but they're moving in the right direction. So you start to see these big five companies have a lot of growth ahead of them, as long as they're not distracted by stuff.
Leo: I would disagree in one respect. There is a significant difference between Microsoft and Apple and Google, Facebook, and Amazon is the other member of the five horsemen of the apocalypse? Apple and Microsoft has significant, strong competition. You could argue that Android is actually stronger than an iPhone. I think it's pretty clear Facebook has no competition. Google has very little. Bing? Very little competition. Amazon just ate the competition. That's a significant difference. Apple is in a much tougher position. Aren't they? You don't have to buy a computer, phone, or tablet from Apple. There are plenty of good alternatives. Their services suck!
Om: Yet they got 15 million people paying for Apple music.
Leo: How much longer? That's the question.
Om: You don't know. In a year, they have 15 million people. It takes 45 years to get to 35 billion. Just think about that.
Leo: The music landscape is different. This may be why Apple is sucking up to Hollywood. Spotify only survives because the music Industry allows it to. Spotify only revenue stream is from subscriptions. Apple can afford to lose money on apple music. It's not their main business.
Om: They get a piece of the cut from Spotify too.
Leo: Spotify doesn't like that much.
Om: I think that there is a lot more opportunity for Apple if this company decided to zero in on services more effectively, Apple pays a great business. I think you have to stop looking at Apple from a hardware perspective, but you have to look at them from a services perspective. If I was them, I'm seriously thinking about maybe we should buy Netflix. That adds a big services component to their business. It's a big acquisition, but they have the stock and the money to make this happen. It also fits into their bigger agenda of having iTunes like, another entity, which can create a lot of revenue for them. The most important thing is they need to be looking at how do you make acquisitions which are more than 300 million dollars. How do they figure out... what are the new things people keep buying from them? What are the new services and you can't build those services, how do you bring those services in house by buying other people like Netflix? I think they need to build up their big data and shops, which they don't, so that iCloud doesn't keel over. They have to do all those things. You know what they don't want to do? The Planet of the apps.
Philip: Can I weigh in here?
Leo: Please, Philip.
Philip: There's a lot..
Leo: Would you short Apple if you were an investor right now?
Philip: No. It's gone up 10% in the last two weeks? There were analysts telling their clients to sell Apple two weeks ago, and they got a lot of mud on their face right now. The services, I think is a bit of a distraction. Apple, in my opinion, will remain a hardware company primarily. Services is in support of the hardware. It's part of the walled garden that keeps people in, and they have to be competitive in services, but they don't have to make money at it, and they don't have to be the best. I think Apple is looking at... I believe they're making a car. I know Jason Calacanis last week floated the rumor that Apple is not building a car, they're just going to go and make the software. That felt like disinformation to me. If you think of Apple as the company that made a lot of money on computers and phones and is working on a car that will probably do what they others did, which is skim off the most profitable part of every market it enters and have a great profitable business, as opposed to say, Android that... nobody makes money making Android machines.
Leo: Samsung does.
Philip: yeah. But they come out with that phone in the quarter when Apple doesn't have a new phone and apple leap frogs. It happens so many years in a row you can kind of count on it. Looking at the other companies, I think what... people may continue to search Google, but I think Google has a structural problem in that most of its revenue comes from the US and Europe, and most of the growth of the Internet is in Asia and Africa and places that people don't spend a lot of money.
Leo: Google does have competition in China. There's some serious competition.
Philip: They don't really exist in China. Right now, you can look at Google as it's funding the growth of the Internet from the revenue that it's getting from its richest customers, but the growth that it is funding is in places where revenue doesn't grow. If you sit back far enough, you can start seeing clouds on Google's horizon. Amazon is an amazing machine, but from a stock market perspective, it's way over-priced. If it doesn't deliver the growth that it's promised, there's going to be a lot of sad investors. Who else do we have? There's Facebook.
Leo: Facebook is strong. You've got to love Facebook.
Philip: Yeah, but Facebook has a lot of the elements of a fad. People are very fickle in social media.
Leo: Doesn't Facebook feel like it's making the right moves to transcend that? Who is going to come along? When you have a billion and a half customers, there's no MySpace coming along to steal that.
Philip: I don't know what's going on in china. I wouldn't be surprised if the next big social media doesn't come from the US.
Leo: Maybe, but I don't see Americans using it. Nobody is using WeChat here. Everybody uses WeChat in china, but nobody is using it here.
Philip: There's a bit of a hula hoop effect.
Leo: You heard it first here, ladies and gentlemen. Philip Elmer DeWitt says Facebook is just a fad.
Philip: It's making a ton of money on advertising.
Leo: It's shown that it can handle mobile, right?
Philip: I'm a little wary of the advertising model that is the way to fund the Internet. We've talked about this before. My eyes have been trained not to look at ads on the screen.
Leo: Banner ads are not the future, I agree. But there's other kinds of advertising. Look at Instagram. When you look at Instagram, a Facebook company and you scroll through the great pictures from Om Malik and Chris Michael and every tenth image is an ad, you're not sure it's an ad right away. I have literally bought stuff in Instagram ads because I went I like that. I think that's a very effective belief. Much more so than a banner ad. Go ahead, Om.
Om: I disagree with Phil. I think Facebook is going to be less of... it's going to be a growth engine for a long time. They're just beginning to start to monetize Messenger. I think payments are a big part of their future, commerce is a big part of their future. They have a lot of opportunity going forward. To think of them as a fad is wrong in my opinion. I think you are underselling Mark Zuckerberg, who is perhaps the single best CEO in tech right now.
Leo: That's what you look at to me. Mark Zuckerberg, place a bet on them as opposed to Tim Cook, to be honest.
Om: Look at Google. Google has so many data streams, and they have the compute power, and the brain power to mashup all those data streams, and build the future of home. Build the future of connected car. Build the future of advertising, build the future of information retrieval. All those things that are fairly uniquely positioned company, they still need to figure out new streams of the future. From a technology standpoint, they have a lot of things going for them. I think same goes for Amazon. Amazon is the infrastructure of society, whether you look at Cloud services or e-commerce services, they are sucking the retail dry by their operations, so Microsoft may not be in the best of conditions right now, but they're on the right track. The Apple, I am mixed on Apple for one simple reason. That they're starting to do a lot of foolish things, but as a platform, they are very strong. As a brand they are very strong. They still make more money for app developers, and they make a lot of great products. In all reality, they too have a future, if they can do services right, they can bring in three sources into the company, which can skew them into forward thinking areas, which involves software and data and Internet capabilities. These five actually have a lot going for them. Who else do you see out there? Do you think Oracle is going to be the driver of the future, or IBM, Exxon Mobile, or Monsanto? I don't think so. You have companies like the five big tech companies, they have scale. They build their own hardware, they can hire whoever they want. They have so much cash that they actually skew the salary situation in Silicon Valley to their own advantage. They have a lot going for them. The big five are the big five. They're going to get bigger and bigger, at least for the near foreseeable future. I'm not talking from a stock standpoint, I'm just talking about who is their competition? Big data and artificial intelligence, we forget how much that depends on compute power, on the ability to get multiple data screens from multiple different sources to make sense of. I think there is a lot which these companies can do, which their competitors can't do. We're starting to see some of the middle level networking companies can't find scale anymore because people like Facebook decide they want to build their own switches and open source things. Taiwanese can make those switches, software... there is a big change happening in the way things are. I would actually look at these five and say there is something bigger going on here.
Leo: Would you add a six if you had a solar city? Maybe a solar city Space x?
Om: I don't know how Space X comes into play. Definitely Tesla and Solar City have the potential of becoming the new energy platform.
Leo: Again, this is Elon Musk, who has a broader, longer-term vision, and seemingly a plan. David, you're silent on all this. Do you have a theory... an opinion?
Om: He doesn't have a mic, that's why he's not talking.
David: I have a mic, I'm here. Listening to Om, I have to say I'm violently in agreement, but the Industry that we grew up in, we're here as technology people. Now we're talking about Apple's retail strategy and Apple's automotive strategy. At some point, I wonder what do we really know about this?
Leo: That's never stopped us before, David. Come on.
David: I understand, but if Apple is getting into the celebrity thing, I have to remind them that Marissa Mayor did so well with that at Yahoo. She's going to end up at Apple next. That makes sense.
Leo: You're talking about Katie Couric.
Leo: She was continuing in the Terri Semold... her predecessor was a Hollywood guy. So she was just following along in his footsteps.
David: And seven million dollar parties and stuff. I'm just saying the world has changed, the audience has changed.
Leo: I agree. We're talking about a really massive company all of a sudden.
David: Yes indeed. Apple's not just a hardware company. Hardware isn't enough to keep Apple going in the future. It's going to be different sorts of businesses than what we've grown up with. We have the benefit of knowing what's happened up until this date, but it's not clear to me that we know exactly what is going to happen in the future, or that anybody does, except that it's going to be very broad based, it's going to be... whatever you call the general public. Whatever the audience is going to be, it's going to not be three and a half, or three white guys and Om sitting around, talking about what's going to happen.
Leo: Om, are you a half? I think you make an excellent point, David. Where once we could talk about PCs and speeds and feeds and gigahertz vs. megahertz, now we're covering a much broader field that is even ventured into the non tech area.
David: There's lots of science that shows up on what used to be tech blogs. Volcanos and space flight. You're thinking, "Gee, we must have run out of stuff to talk about."
Leo: You're not thinking about volcanos on this show, I can tell you. A little hot air, maybe, but no lava.
Om: Let's talk about Apple. There are things Apple does which nobody else does really well. They still make the world's best mobile chips. Because they have so much money that they can hire people, engineers, to build new kinds of silicon to not only make their phones slimmer and slimmer but to do some crazy things. Similarly they have the best material science people to build new kind of alloys for their phones and for their watches and computers. They do so much deep tech, which we don't see and nobody talks about. Same with Google and Facebook and Microsoft.
Leo: George Gilder pointed this out decades ago with Microcosm, that the economies of scale really start kicking in in the chip business and so forth. But so innovation's happening but it takes leadership to know which direction to innovate in. It's not enough merely to buy PA-RISC and hire a thousand chip designers. You have to then point them in the right direction.
Om: I mean and I just think that is not going to go away from the Apple core, because that's the thing that makes them great and that's what they've been keep focusing on. Again, I keep harking back on these ideas of like not doing core stuff, which is—core stuff is doing better chips and better materials and better phones and generating more demand with great ads and not through—
Leo: It's a leadership issue, though, right?
Om: No, I think Tim Cook is fine. I think he's a fine, fine CEO. But he needs more people to understand internet around him. I think there is a lack of understanding in that company. There is a lot of DNA in hardware. They need more software, software from an internet perspective, not software from a desktop or an OS perspective. They have ample capabilities in that. What they don't have is the ability to think about the internet and big data and intelligence in a smart, modern way. I think that's what they need to be focused on.
Philip: Let's talk about that because that's been the—when it was clear that Google was sort of doubling down on AI and Microsoft and Amazon talked up their AI efforts, and they clearly have a lot of strength in the massive amounts of data they're collecting and the kind of control they have over by extracting stuff from it. It put pressure on Apple to step up. And I don't know what to think about Tim Cook saying, "We've been doing advanced AI for years." Yea, maybe. Siri clearly needs AI to work.
Leo: If Siri's their example of advanced AI, they've got a long way to go. It's a laggard in that area.
Philip: Hey Siri? Hey Siri? Hey?
Leo: Hey, hey, hey, hey! Hey, you, Siri!
Philip: So and now then just this week they've bought, reportedly spent $200 million dollars buying Turi. What was funny about that for me is I went to try to find out what Turi's about and I watched some video. They give conferences every year. So you can find out exactly what they're about. And the last conference that this guy, what's his name, Carlos Guestrin gave, he had a graphic that showed all the ways that machine intelligence, machine learning is effecting all these companies and it had basically everyone in Silicon Valley but Apple. And then Apple is the one that buys them. So you know, the—
Leo: By the way, they bought them at a premium price, right? It's widely agreed that $200 million dollars is a premium.
Philip: Is that why they agreed?
Leo: Yea. A lot of people said big pay day for Turi, I think was the—
Philip: Well, yea, of course. When you get bought by Apple, yea. Again, I see them as a hardware company. I think that Om is right. They have a weak spot because knowing how to map the internet and take advantage of it and be a player there is not, doesn't seem to be in their DNA. Wasn't in Jobs' and it's not where the smartest people and the best engineers at Apple go. It's not how they get rewarded. Their interests don't align with being great at that I think because they're a hardware company.
Leo: Let's take a break. I have more, we have much more to talk about. We have Philip Elmer-DeWitt. Apple 3.0 is his new blog at P-E-D-3-0.com. 3 zero I should say because it's zero. 3 zero—put a slash through that O. com And also Om Malik form P-I.C-PO and om.co and David Coursey from coursey.com. @techinciter on the Twitter. Our show today brought to you by FreshBooks, the super easy cloud accounting software that changed my life. In 2004 I was still a freelancer and I had to bill a Canadian company every month. Not only bill them for my time, but also expenses in Canadian dollars and I was just painful. Firing up Excel and Word and making an invoice and sending it out and sometimes I'd just forget or I'd—I didn't forget, I'd put it off. The problem with being a freelancer, if you don't make the invoice, you don't send the invoice, you don't get paid. I was complaining about this, how hard it was to Amber McArthur, my co-host in Canada. She said, "Oh, there's this new company that just started in Toronto. You're going to love FreshBooks." Man, that changed my life. FreshBooks makes it easy, not only to send out invoices, it basically takes the paperwork out of being a small business owner and after all, unless your small business is a CPA accounting firm, this is not why you got into business. Using FreshBooks to create and send an invoice literally takes about 30 seconds. There's no formula, no formatting. They handle all the currencies. Just perfectly crafted invoices every time. You could of course put your brand on your invoices, send recurring invoices. It's easy to get receipts for the invoices. You just use the FreshBooks app and take pictures so it's very easy to get paid back for expenses. And of course your clients can pay you online which means you get paid a lot faster. With FreshBooks you can also set up auto-payment reminders so that in fact if you've got a cooperative client, it can all be automated. You bill, they pay automatically. There's a super handy deposit feature. You can make an invoice for payments up front while you're kicking off a project. You can also import expenses automatically. I mean this is all about getting the job done faster, spending less time on the boring stuff, doing more of what you love, your business, your work. FreshBooks can even show you whether or not a client is even looked at the invoice. So if they say, "Oh, I didn't get the invoice." Then you say, "Well, you opened it and read it on October 3rd. Where's my money?" They even have an EMV chip card enabled card reader so if you work in people's houses, you can use FreshBooks, the whole process. Give them an estimate on the phone or tablet. Give them an invoice with the phone or tablet. And they pay on your phone or tablet using the chip card reader. I should just—I could go on and on. Why don't you just go there and try it. FreshBooks.com/twit the only thing I would ask is when they ask you how'd you hear about it? Just put This Week in Tech in the How Did You Hear About It section because they like to know how you got in the door there. Start your 30-day free trial right now. It's the number one cloud accounting solution for small business owners. FreshBooks. They saved my life. They could save yours. FreshBooks.com/twit. We thank them so much for their support of This Week in Tech.
Leo: You compared Apple to Yahoo (laughing). I don't know. It's not that bad, is it, David? Oh, he's muted again. Is that us or is that you?
David: It's not me.
Leo: Oh, now we hear you, go ahead.
David: Yea, it was not me.
Leo: No, we must have muted you.
David: Well I think it's when you go off into this entertainment business that really isn't what you know how to do.
David: You end up—Yahoo hired a bunch of name brand content for a platform that had no place for name brand content. No way to promote it. So they through it into Yahoo and it just disappeared.
Leo: And now it's a Verizon company.
David: And now it's a Verizon company with its sister company AOL. It's like valley of the dead.
Leo: (Laughing) You do wonder what Verizon's thinking.
David: Planet of the Apps? How creative was that? I mean did it take them more than a second to think of this? And Gwyneth Paltrow? Now she and Marissa Mayer should be like co-host together.
Leo: That would be good. I'd watch that.
David: Oh, yea. It would be a huge—
Leo: So Marissa said she's going to stay at Yahoo. I have to wonder because according to Fortune, your old site, Philip, the real number for Marissa Mayer's golden parachute is $122 million dollars, 578 thousand, 795 based on stock, $42 million dollars-worth of stock and other shares, restricted shares and new grants and salaries and geez Louise. Why would she stick around if she could take $123 million dollars out the door? "She did alright, even if the shareholders didn't," says Fortune Magazine (laughing). Oh, well, you know it's sad. We love—Yahoo has a great and wonderful history in the internet but times change. Things move on. Speaking of which, Jet.com is moving on. This is yet another fantastic exit for the founder of Jet.com, who by the way is probably going to have to stick around for a few years. Marc Lore, you may remember, founded Diapers.com in 2005. And Amazon undercut them, practically put them out of business then bought the company. Marc Lore had a decent payday, went on and he's now founded Jet.com. And according to the Wall Street Journal, Walmart's about to buy them for $3 billion dollars. If anybody could challenge Jeff Bezos and Amazon, it's gotta be Walmart, yes? Who wants to take this one? Nobody (laughing).
Philip: It's all yours, Leo.
Leo: You got to admire Marc, though. He's come up with a brilliant strategy which is create an Amazon competitor, let Amazon practically put you out of business, because I don't think Jet.com was going anywhere, let's be honest. And then sell it.
Philip: I don't even know what they did. What did they do?
Leo: They were—oh, see, there you go. Perfect example. They were an Amazon competitor.
David: Well that story says they're picking up 350,000 customers a month. So if that's the case, you really—
Leo: I find that hard to believe.
David: Well it's buy them then kill them. I mean just they are subsumed, assimilated into the greater Amazon. Being washed downstream, never to be seen again.
Leo: I tried Jet.com. You had to join I think. You had to pay kind of like Prime I guess. And then it wasn't—you know, you've seen the ads maybe, obviously you haven't, Philip, where they had the price shrinking gun (laughing)? See, this was a terrible—the whole thing was just—and the problem is Amazon, this is what I'm saying, has no competition. Maybe your local grocery store but maybe Walmart, right, because Walmart doesn't need to build more fulfillment centers. They've got Walmarts everywhere and warehouses everywhere. They could even offer same day delivery in areas. So, I'm not-- $3 billion dollars to a company that has hundreds of billions of dollars in revenue every year is probably a small amount of money.
Philip: I have a hard time seeing Amazon as kind of a malevolent force. It's kind of hollowed out a lot of downtown areas.
Leo: There's no book stores left, that's for sure.
Philip: And you know and that was just the first. One industry after another, they've kind of gobbled up. And it turns out, where they're making their money is in the big data centers they've built. It's almost—
Leo: Oh, yea, the S3 and Amazon Web Services, yea.
David: But it was really Walmart that cleared out small town downtowns before there ever was an Amazon.
David: So Walmart has cleared that out. They've also cleared out a whole bunch of jobs. Amazon showed up and cleared out the bookstores. And between them now, they're clearing out shopping malls, retail.
Leo: They've cleared out everything left, the strip mall, everything.
David: Anything that does not require a human to help you is going to be in deep trouble.
Leo: Amazon is hyper-competitive. I mean obviously with their book deals, with the publishers, they've really ground the publishers into dust. Now they're leasing 40 cargo gets. Amazon Prime Air and I have to imagine that some of this is to continue to get prices from UPS and FedEx to drop. Amazon, there's a great book about Amazon which I'm trying to remember the name of it, but it was—
Philip: Something Store. The Everything Store?
Leo: The Everything Store. Fabulous book and they talk about this. UPS said, "We're going to raise the rates." Jeff Bezos said, "Mm, really?"
Om: I think they—can I just make one comment about Amazon?
Om: You guys were talking about them making all their money from their data centers.
Leo: Web Services.
Om: Cloud services. Actually that's not true. Their non-AWS business, which is non Amazon Web Services revenues in the last quarter were 29% which was 26% before. And it was up from 19% in Q4 of 2015.
Leo: And Prime day was the best day ever, right? So they had their best day ever.
Philip: Yea, but that's the revenue, Om. How about the profit?
Leo: But Jeff has a dial in his office, that says, profit, let's turn it up, let's turn it down.
Om: No, no, no. Let me just stop you right there. Their non-AWS EBITA was $1.2 billion dollars in the most recent quarter versus $684 million a year ago.
Leo: But that's their—that's Bezos' decision. They decide whether to reinvest or not.
Om: Right. They invest in new things. They are smart about investing in new things.
Leo: I don't want them to make money. That's why, by the way—
Om: I don't understand what we are talking about here. This is a company with an almost $30-billion-dollar revenue which grew 31%. I mean in this last 3 months for God's sake. You know they are 3rd party sales, 3rd party which has got nothing to do with what they are selling. This is people selling on the Amazon site.
Leo: Using their fulfillment in effect.
Om: That business was up almost 30%, ok. So it is-
Leo: But doesn't that scare you, I mean, Om?
Om: I'm just saying we keep talking about AWS and how much AWS is making money for them. Actually that is just a myth. They actually make a lot of their millions from their non-AWS businesses, and they actually have a lot of profit margin in there. They choose to spend their profits on new opportunities.
Leo: On jets. Well, AWS—I guess the interesting thing about AWS is that it came out of nowhere. We got all these computers, we should probably do something with them. And they built the strongest cloud service platform besting everybody, including Oracle, Microsoft and Google.
Om: They're taking market in that sector. They're sucking up the dollars from the Oracles, from the HPs, from the mightier companies. Not from—this is a new way of doing things. I mean like you can choose to like them or dislike them but what they are doing is, is building out a really interesting business which is very strong. It's like they're logistics, they're a logistics company. They do logistics for data and you know bits, and they do logistics for atoms. That's what they do. They are essentially a logistics company and they are spending a f***-ton of money on making those logistics be better. They have fulfillment centers, they have their own air force.
Leo: 40 767's. They're leased but that's the smart way to do it of course, not to buy.
Om: The whole—like you and I talked about them as a company a long time ago. And you know, I obsessed about Amazon not from a commerce standpoint but as like a macro-company standpoint.
Leo: Well I like it that they're a logistics company. That kind of makes sense.
Om: Right. So if you really think about it, what they are doing, and I wrote about this on pi.co in a conversation with one of my people I interviewed, Liam Casey. I think we all like to think of commerce and retail in the old terms in which goods come, they sit on the dry docks and they go to warehouses. And they sit in warehouses. Then they go to distribution centers and from there they go into the corner stores. What Amazon is doing is building into an always moving supply chain so you are never, you're squeezing out every single inefficiency out of the logistics chain and then making that work for you from a profit standpoint. So when guys our age, Walmart and Jet.com talk about merging, that's an interesting idea. That's an interesting Band-Aid. But what they have to do is think about how these guys are thinking. End to end, same day delivery so that you don't even have to think about going to your neighborhood retail store. And that is only possible when the cogs are constantly moving in the supply chain. And how do you do that? By building the most awesome, kick-ass logistics chain in the world. And that's what these guys are trying to do. And the audacity of Amazon is what I am most impressed by. Am I scared by them? Of course I'm scared of every big company controlling every part of our life. I don't even for one second do I think twice about Amazon as a giant monster which is going to gobble up everything. They will.
Leo: (Laughing) So, that's it. It's over.
Philip: So we agree.
Leo: It's scary only in the sense that they're—once there's no competition, Amazon just eats the world, right? Who needs the corner store anymore? And by the way, I'm all in on Amazon. I buy everything from Amazon. I just bought a giant TV and that doesn't make any sense to ship that across the country. But I bought it on Amazon instead of going down to the local electronics store. By the way, I don't think there even is a Best Buy in town anymore. So. Is that good? That's not good for consumers. But well, maybe it is. I don't know. I'm happy.
Om: I mean I'm just saying that they will eventually make money and they will make—
Leo: Well they make as much money as they want to make is what they're doing right now.
Om: So it's just a different place for them to be.
Leo: Yea. And now they have an air fleet (laughing).
Philip: Do we think they're really going to deliver by drones?
Philip: They're trying it out in England with—
Leo: No. You know what is interesting, there is value in drone delivery, not in the 1st world. But for instance when Haiti had that terrible earthquake and they couldn't get—there were lots of places you couldn't get medicines into and other important commodities, drone delivery was the only way. You couldn't get a truck over the roads. They were able to do that. And I suspect that's really more the future of drone delivery then just bringing it down my street here and dropping it on my doorstep. Why do that?
Philip: And so why promote it? Why did they unveil the drone? Why did—
Leo: Because he was on 60 Minutes and he had to have something interesting to say.
Om: I think the big thing about tech companies and their stock market valuation is you have to promise people or show people what's coming next.
Leo: You don't get a price to earnings ratio of 3,500 by not showing something cool once in a while (laughing).
Om: I mean you know why is Facebook talking about Oculus all the time? That thing isn't putting anything into their bottom line for a very long time.
Leo: If ever.
Om: Right, right. So it's all like Google doing things with diabetes contact lenses and you know, connected car. All those things are in the future. The reason they are doing this is because what else would you do with your money? Give it back to the shareholders like Apple is doing? That makes no sense.
Leo: Well, Apple's keeping most of it in Ireland, really. That's—
Om: Also, they're giving a lot, they're doing these share buybacks.
Leo: The buybacks are good, yea, but that gives them more control of their destiny, doesn't it? Isn't that the point?
Om: I think that is a nice way of saying it. The other company that did a lot of buybacks? IBM. Look at where they are.
Philip: Buybacks are not necessarily a good thing. I think part of it is that they pay their employees in stock and they have to—the buyback is allowing the PE ratio to at least stay even in this town.
Leo: By the way, Amazon's PE ratio which was 3500 when they did that 60 Minutes interview is down to a mere 190. So, I don't know what that means.
Philip: He turned the dial and generated.
Leo: I swear to God, he's got a knob. How much profit should we have this quarter, Jeff? I don't know, let's set it to 10% right there.
Om: And this is not a cranky geek version of the show. You guys are not cranky, not at all. David is quiet.
Leo: David, get cranky (laughing).
Philip: I don't know, he's been pretty cranky.
Om: Hey I feel like I'm the only one playing by the—
Leo: No, I'm Mr. Affable. They told me I have to be affable.
Om: What's wrong with you, Leo? I'm not going to come on the show next time.
Leo: Oh, gosh. Oh, I got to get cranky. Got to get cranky.
Om: Hey I am bearing the brunt of crankiness right now.
Leo: I'll think of something to be upset about.
David: Ok, let's talk about the Olympics for just a second.
Leo: Oh, that will get us cranky. Hold on. Hold on, hold on. Comcast—there we can get really cranky.
David: I can get cranky.
Leo: We can get cranky. Save your crank. We will have a cranky moment (laughing).
David: What do you mean by that? Save my crank?
Leo: Save up all the crank.
David: It's good to see the Feds are coming through the door.
Leo: Save your crankiness and we will be back with more in just a moment. Great panel. I know I billed them as cranky. They're too nice. Philip Elmer DeWitt, Om Malik. He's the only cranky one in the bunch. And David Coursey, whose crankiness is yet to come. If you mention the word Comcast, I might get cranky too.
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Leo: So, you've been watching the Olympics, David?
David: I've been watching some of the Olympics and the thing that impressed me was this story that says there's 6,800 hours on 11 channels and Gold only knows how many individual feeds. They've reprogrammed cable boxes to make the Olympics Boxes because the cable company owns the content.
Leo: Comcast owns NBC Universal which is of course the company that owns the Olympics in the United States.
David: And they are vetting the company sort of the Olympics and sort of the future of television as expressed through these Olympic games.
David: That's just wrong. I have said for a zillion years that a company that provides carriage should not be allowed to be in the content business and we're really finding out why that is. That all of our content is now being owned by people who do carriage, or significant parts of it, and that's—if we talk about net neutrality, you know, what is that? It's just evil bad and I'll just stop there. Comcast is an evil bad company. And they are. If you ever do business with them you'd know that.
Philip: Well I tried to watch the Olympics on TV. This is not to your point. And maybe it's not cranky enough, but it was terrible. It was all interviews with what's his name, the swimmer. And building up the usual thing. They focus on the Americans and choose a hero and do a lot of interviews and try to build up some drama. The good news is that you can watch what you want to watch on the app which is actually pretty good. The NBC Sports app shows you what's playing and if you're into table tennis—have I frozen? No.
Leo: No, you're good.
Philip: Or I wanted to watch Serena Williams beat this Australian woman and it's all there in hi-def and without commentary. And it's actually quite good. I don't spend a lot of time watching sports but it was striking how bad it was, and how good the web version was.
Leo: To be fair, NBC every two years does this, ruins the Olympics. They time shift it, they jam in more commercials than you can eat. At least they've got an internet strategy that gives you a chance to see some less watched stuff without interruption.
Philip: I'd love to see some stats about how many people are watching it.
Leo: I'm sure it's moving that way, right? But I completely agree with you, David, that Comcast, it's anti-competitive. They should never have been allowed to buy NBC Universal in the first place. And it's ridiculous that they own the cable box and then they are going to be broadcasting the Olympics.
David: Well as an AT&T customer, I can't get on their cable box.
David: Which is good in some ways and bad in other ways. I mean the government has just so messed up media ownership.
Leo: It's just asleep at the switch.
David: Well starting with radio and television and how many stations can one company own? Well it turns out 1,000 but they can't afford to run any of them. They're no longer local. The companies are almost going bankrupt.
Leo: It's horrible! It's horrible.
David: Both iHeart Media and Cumulus are both in deep trouble. And the public ends up getting screwed because nobody was there to tell the money people, "No. No you can't do this. This is bad for the people you are supposed to be serving." Just as simple as it is.
Philip: And what's wonderful about the way it turned out is that we happened to be in what I believe is the golden age of television with these wonderful series.
Leo: Mostly over the top, mostly not on the cable. Mostly from internet companies like Netflix and Amazon.
Philip: Yes, right. Exactly. Exactly. The great stuff has moved on. It's not on—
Leo: Well, to answer your question, ratings for the opening ceremony, that's the only thing we have right now, were off 28% from last time.
Philip: Well it was a pretty bad opening ceremony, too.
Leo: It's always bad. It's always kitschy and silly and it's a little bit like the Macy's Thanksgiving Day Parade with the parade of the countries and all that.
Philip: Not the Chinese opening ceremony. That was impressive.
Leo: That was pretty amazing, yea. London had 28% better ratings. So maybe Comcast is getting its comeuppance.
David: Well they went to this light effect in Rio because they didn't have any money to do the opening ceremony so they did all of that light stuff. I mean I don't know how you make an opening ceremony boring. I think some of it was Brazil lecturing the world on environmental stewardship. Is that the same Brazil that I've been thinking about for the last 2 decades?
Leo: The ones that are destroying the Amazon?
David: Bringing down the rainforest. Is it that Brazil we're talking about?
Leo: Comcast of course being sued by the state of Washington. $100-million-dollar lawsuit against Comcast accusing the company of $1.8 million violations of the state's Consumer Protection Act. That is overachieving really. That is quite impressive. The state isn't saying the customer service was bad, but for misleading practices. And anybody who's gone to Comcast and has been offered various weird packages like the $4.99 per person service protection plan which Comcast—that's per month by the way. $4.99 per month per person service protection plan which is according to the Washington attorney general, "Near worthless." Comcast promoted the plan as a single-fee program that would cover all service calls including those involved in wall wiring. However any work on wires concealed within walls requiring wall fishing was excluded. Which means in fact you have to pay for in wall service calls. If we have to get the wire, no, that's going to cost you (laughing). And on and on and on. And everybody who's ever dealt with Comcast, especially over the phone—I have to say when you go into the Comcast store, where there's actual people, this underscores really what I've been realizing. When people are face-to-face or they have to use their real name and their real persona, they're almost always unfailingly nice. It's when they're hiding behind the phone or you know—
Om: The internet.
Leo: Or hiding behind a handle that they can be the jerks that we think we all have deep inside. Comcast also, now this is a new story, just came out, wants to sell your web history. Comcast is telling the FCC that they, like AT&T—I didn't know this—want to offer reduced cost plans for customers who say, "Hey, you can track our web history, search activity and other online behaviors and sell them to the highest bidder for which I will get a lower fee for my service."
Philip: Well there is something good about that. I mean—
Leo: They're doing it anyway, might as well get something for it. Is that what you're going to say?
Philip: Finally someone's putting some value on the information that they're gathering.
Leo: (Laughing) yea, yea.
Philip: Otherwise they're going to take them for free.
Leo: Do we know anybody, anybody in the chatroom who is accepting AT&T's offer of lower cost service in return for you know, collecting information about you? Is anybody doing that? It doesn't seem like a huge—
David: Well, Amazon does a variety of that when they sell you a Fire tablet with ads.
Leo: For nothing. For $50 bucks.
David: They'll give you $15 dollars off lifetime for the cost of the device, but whenever it's not turned on it's going to be showing you advertising.
Leo: Right. And after all I think we all know that Google and Facebook are making that tacitly, making that trade-off. It's a free service. You get a lot of great free services but there's a cost in terms of privacy.
David: Well that brings us—I have a client that is in the native advertising business. So I am disclaiming that. But—
Leo: Native advertising is ads posing as content.
David: Well, that's the dodgy definition that everybody uses and it turns out that a lot of companies are being dodgy. I saw a study, I'm going to do a blog post on it, that says lots of lots of native content, which is also that content recommendation, all that garbage at the bottom of the average web page. All of that is the Taboola, the Outbrain, neither my client, that's all what we're talking about. But you know, they and the newspapers particularly are just recoiling at the rising ad blockers. Supposedly 20% of mobile users have an ad blocker on and the New York Times and some other sites are starting to trap ad blockers, and say, "No, if you're going to block our ads, you're not going to see our content because we've got to make money off the content."
Leo: Well and Facebook and the Federal Trade Commission now are being very clear that you have to be over and above, you have to really tag stuff as an advertisement. It's getting more and more difficult to pose as content. Facebook says you have to have information in the post that says "This is an ad." The FTC just announced today that they're going to start cracking down on people on Instagram and other social feeds who don't sufficiently disclaim the fact that it's an ad. For instance, a very common practice is to put the hashtag ad in there but to put it in a big tag cloud at the end of your post so nobody sees it. Or to instead of using the word sponsor, use the word SP, #SP or #SPON, which is not widely understood I think to be a sponsored post. So the FTC recognizes that some of this native content is really just tricking people into believing it's real. It's a big problem on social media.
Philip: Speaking of big problems on social media and Facebook, I love that they've deprecated clickbait headlines.
Leo: Yea, isn't that great?
Philip: Ah, ah.
Leo: I can get cranky on Linkbait. I can get real cranky on that.
Philip: Oh, my God. They had some good examples here. Let's see.
Leo: "Facebook is changing its News Feed again," says CNET, "and you'll never guess how!" (laughing.) I love it.
Philip: Where are the examples? It wasn't in the CNET story. You won't believe what's about to happen when you clickbait these headlines.
David: Jaws dropped.
Philip: When did jaws dropping become like headline bait?
Leo: Jeff Jarvis often talks about clickbait. He says the thing he hates the most is when it tells you how you're going to feel. You won't believe what happened next. The answer will surprise you. This is amazing. You're going to—you know, and he just hates that.
Philip: At Fortune towards the end in the Chinese phase of that company, we were instructed on how to write clickbait headlines. And the trick according to the guy who was the expert, was to generate an emotion in the reader.
Philip: And that's what all these things are. Your jaw will drop. You'll be amazed. You won't—
Leo: Here's from TechCrunch, here's some examples. "She Looked Under Her Couch and Saw THIS…I Was SHOCKED!" Or "He Put Garlic in His Shoes and What Happens Next Is Hard to Believe." Or "This Dog Barked at the Deliveryman and His Reaction Was Priceless." (laughing).
Philip: Right. And the other trick they're using there is to not tell you, to leave out the fact that you have to read the story to get the answer. The newspapers didn't do that in the past, but it's when everybody does it all the time, I don't know, it makes my head hurt.
Leo: Well I was talking about this with my wife this morning because I doubt she's old enough to remember the classic New York Post headline, Headless Body Found in Topless Bar. And—
Philip: That's a great headline.
David: But that one—
Leo: But it delivered. There really was a headless body in a topless bar. It wasn't deceptive.
David: We never had a kind of deception in newspapers that is absolutely common on the internet today.
Leo: Oh, it's terrible.
David: I disagree. Philip suggested that newspapers used to be this way. Well, no, they never really used to be quite this way.
Leo: They didn't need to get clicks, right? They just needed you to buy the magazine or the newspaper off the stand so—there was one headline, right, that would get you to buy it.
David: It was several front page headlines that were as reasonably juiced as they could be. But ultimately had to pay off. On the internet, Look How These Famous Stars—You Won't Believe Number 6. You know, child stars of the 70s. How do they look now? You won't believe number 5. Well, right, I didn't believe number 5. I didn't even go there.
Philip: And when you go there, you don't get that. You don't get the number 5.
Leo: That's the main problem, right?
Philip: You get 10 other linkbaits, clickbaits. It's really bait and switch 24 hours a day.
Leo: So it's always been my opinion that any company does that, does that as a last ditch attempt to save themselves because of course you know eventually your readers are going to rebel and stop reading your links entirely because if you don't get a payoff, you know, we're not rats. Eventually—I mean we are rats. Eventually, you don't get any cheese, you're going to stop pressing the lever. So it's not something you do as a long term strategy. It's more like desperation I would guess.
David: It's been going for 5 or 6 years now, so.
Leo: Yes because there's lots of publishers slowly going out of business. So as each one goes down, you'll see the clickbait. Whatever happened to Upworthy? Are they still around?
David: Yes, but barely.
David: Oh, they're dong video now. Yea, they say they're doing great with video.
Leo: Yea, we're doing great with video and you won't believe what happened next. Om, you must have an opinion on clickbait.
Om: I just love what you guys are talking about.
Leo: (Laughing) I think Facebook's right to do this because it hurts them too, right?
Om: I hope so. Or maybe they want people to pay for getting their clickbait headlines to show up.
Leo: If you want to click clickbait, you've got to pay.
Om: You've got to buy some ads. Nothing in life is free, not even clickbait.
Leo: Let's take a tiny little break, come back with more. We had a great week this week on the network, on TWiT, and we created a small, mini-movie. There is no clickbait in here. This you will enjoy.
Narrator: Previously on TWiT:
Male Voice 1: No, no, ah! He dodges the ball but it is inevitable that he would soon be captured by the Pokémaster.
Narrator: iOS Today.
Megan Morrone: Mark Gursine is a viewer and he said, "I want to know what all our apps know about us. I want to know what apps are using my microphone." So these are—
Leo: Look at that. And you can disable them at that point.
Narrator: TWiT Live Specials.
Father Robert Ballecer, SJ: Today, security is not an afterthought. Today security is far more important with our mobile devices and our always on networks which is why we're here in Las Vegas, Nevada for Black Hat 2016.
Male Voice 2: I wonder why nobody went after ATM machines and I actually went and looked at the attack surface of the actual ATMs.
Fr. Robert: You created a device that could do the PIN entry and that it just spat out money.
Narrator: Tech News Today.
Georgia Dow: Owen, you have turned to the emoji dark side. I have proof that you are now an emoji convert.
Owen JJ Stone: I hate emojis. I don't like emojis. But you know what? I use emojis with people that I love, i.e. my daughter and Georgia Dow. But if she's going to bash me here on national internet, see, you're spoiling it for everybody. Now nobody gets emoji again.
Narrator: TWiT. We love you.
Leo: (Laughing) a great week ahead. Megan Morrone has the details.
Megan: Thanks, Leo. There are a few more quarterly earnings reports to look for this week including RackSpace and Yelp. Plus it's the Usenix Security Symposium in Austin, Texas. And OpenStack Days: Silicon Valley and Mountainview. That's the annual open source infrastructure conference held at the Computer History Museum. And that is just what's happening inside. Astronomers are predicting that if you head outside on August 11th this week, you'll get to see the Perseid Meteor Shower in all its glory. One final way to celebrate tech this week, it's IBM PC day on August 12th. This week in 1981, IBM introduced the Model 5150 personal computer. Let's celebrate. Back to you, Leo.
Leo: Wow. Ok, old cranky guys, how many of you had an IBM PC 5150? Anybody? Nobody?
Philip: Apple 2.
Leo: Apple 2. Well actually the Mac was already out by the—no, no, I guess it wasn't. This was '81. Yea, yea. I couldn't afford a PC so I got one of the early clones. I think it was called an Eagle. It was terrible.
David: I had a Kaypro.
Leo: Kaypros were cool. I always wanted one of those. Yea.
David: Too many Ks and not enough pros put the company under.
Leo: It was running CPM.
Philip: They say that people that carried Kaypros around still have a tilt to their body.
Leo: (Laughing) because it was a 30-pound portable. We've come a long way. Om, what was your first computer?
Om: It was a Windows 3.1.
Leo: Oh, boy.
Om: Computer. I can't even remember the name, the brand. It was just some—
David: The Leading Edge.
Leo: Om, remember Leading Edge? And Packard Bell.
David: No, Packard Bell came back for a while.
Om: It was something worse than that.
David: Hold on, PCs Limited.
Om: No, I just bought it from a guy.
Leo: Some guy.
Om: He just, I think he put it together and sold it to me. Actually it was not Windows 3.1 it was Windows MS-DOS.
Leo: Oh, yea, so it was right about that ear then, the early 80s.
David: You did that in Austin, Texas. The guy was Michael Bell, so that's who it would've been.
Leo: Yea, out of his dorm room, right?
David: And out of the trunk of his car.
David: Yes, he did that.
Leo: You want to buy a PC, I've got some great ones in here.
Om: Some guy that lived on 30th street or 34th street, 35th street in New York. Like this was when I was living in New York.
Leo: You've got $5-dollar watches and Windows 3.1 PCs.
Om: No, it was like somebody was in the building. You had to go up to the office and oh my God.
Leo: And what did you want to do with it? Why did you think this was a good idea (laughing)?
Om: I just wanted to learn a few things. Use it for word processing also learn a bit of Basic. And it was early days. Did you notice this was 25 years ago when the first website went up?
Leo: 25 years ago, wow.
Om: This week, so.
Leo: Wow, so there you go. This is a bunch of anniversaries. We've come a long way. The first website went online—what was the first? Was it Tim Berners-Lee? Yea, there's Tim. Sir Tim I should call him now. It was a basic test, I'm sorry, text page with hyperlinks. He was a physicist. Worked at CERN at the particle lab and he wanted to share papers with colleagues and let them annotate them as well as read them. So he created the world wide web on that, that's a Next Cube. It's one computer I've never owned. Wish I had though. Loved to have that.
Om: Yea, that looks so good.
Leo: They're beautiful. Didn't work so good, I think (laughing). That's Steve Jobs in a nutshell, man. It sure looked good.
Philip: Didn't come with a hard drive that worked.
Leo: Didn't work so good but man, did it look pretty while it was crashing.
Om: It's a little ahead of its time.
Leo: Maybe that's it. And after all, hey, if that's the only thing people did with a Next Box is write the World Wide Web—
Om: Pretty damn good.
Leo: That ain't bad.
Philip: Right, it led to OSX, too.
Leo: That's true. His next step, the operating system became OS10. Absolutely.
Om: I have to say as a cranky old person, God I miss Steve Jobs.
Leo: He made it interesting.
David: Well earlier during the Apple discussion, I was going to ask the question, "What would Steve Jobs do?" When Steve died there was a lot of discussion about how much product pipeline is there.
Leo: Right. I think we agreed the Watch was the last thing he might have touched, right?
David: Well he talked about television.
Philip: I read recently that he was talking about a car, too.
Leo: That, by the way, I'm sorry, is the stupidest thing Apple could do. If you think it's bad that they're doing a TV show, a reality show about apps, the car, Project Titan is even worse.
Philip: Ah, we disagree there.
Leo: Really? I think that's getting your eye off the ball bigtime. That is such a long—that's a moonshot.
Philip: Yea, well and you know one sock that I would short is Tesla.
Leo: I just got a Tesla. I love it.
Philip: I know. You love it.
Leo: I think Elon Musk is the new Steve Jobs. He's the most interesting guy out there doing the most interesting things with the broadest, longest term vision of them all. Why Space X? He wants to harvest trillion dollar asteroids.
Philip: Have you read the book about him?
Leo: Yea, Ashley Vance's book, yea. I interviewed Ashley as well.
Philip: He—I knew Steve Jobs and he's no Steve Jobs.
Leo: (Laughing) all right. He's not as arrogant anyway. No, Steve was a piece of work. And I think fun, not so much to work for.
Philip: He's fun to watch.
Leo: Fun to watch. And that's one thing Steve did that none of these—Jeff doesn't do, Mark doesn't do. He really, he put on a show. He knew how to put on a show. And that's really, I think, as tech journalists, that's really what we honor him for. There was nobody better. He was the PT Barnum of technology. There was nobody better at putting on a show. That's all I'll give him.
Philip: So that's our third obituary of the—
Leo: Well, he died a while ago. I think he's been gone for a while. Meanwhile, you can now put a phone in your pocket that has 10 times the power of any of those early computers. 1,000 times, 100,000 times. Samsung announced this week its Galaxy Note 7 with an iris scanner. So you can just look at your phone and it will go, "I see you. I know you." Unclear how well it will work although my colleagues who were at the event said it worked very well and very fast. We've seen iris scanners on phones before, most notably the Windows Phone, the 950 and the 950XL from Microsoft which was terrible. Today on the radio show it's like your dad taking a picture. Get a little closer. No, a little farther. Look up. Look up. No, look down. Left, left, left, right, right. Nobody wants to do that. But apparently the iris scanner in the Galaxy Note 7 will pick up your Iris even if you're not looking directly at it. But I tell you, this is just another example of how we really are at peak computing. Hard to come up with something new, isn't it?
Om: How can you say that?
Leo: I'm jaded and old.
Om: No in 25 years the internet was just, the web was just like a document which we certainly put on the internet and today it's in our pocket. We do amazing things.
Leo: Yea, but it's been in our pocket for some time now, so I'm like what have you done for me lately (laughing)?
Om: We've only barely started to figure out what to do with all the information which is out there. We barely figured out how to use all these sensory related data which we get from our phones. I mean we've barely scratched the surface. I am more excited about technology today than I was 5 years ago, and 5 years ago I was more excited about the future than I was 10 years ago. I just feel we will never be peak human intelligence. We will never, despite what people say about artificial intelligence, the human brain is still not understood what it's capable of. I think it is an amazing, amazing time to be in technology. I wake up every day and I'm still excited about it. I'm still excited about the idea that some kid somewhere is going to blow our socks off and we will rethink the future again. I think that is, that is what makes this industry work. We started off with a guy like Blake who decided that he wanted to watch his favorite basketball game and baseball game while he was in Japan so he invented play shifting. And I think that there will be some guy who will come up with another new thing, or a gal, or whether it's in the US, it's in China, who the hell knows? But the future is yet to be invented.
Leo: I love that optimism, Om. Of course that's true.
Philip: Can we end the show now?
Leo: No, I have one more ad. But then (laughing)—actually before, we'll do the ad, but before we go I want to give you a little time to think during the ad. I agree with you, Om. The problem is right now what we see is a lot of shiny new attempts like VR that maybe just really aren't going to change the world. So I'd like you guys to talk about, when we come back, we don't know who that person is and what garage they're working in or what they're working on, but maybe you have some thoughts about what areas, what direction will be interesting in the next few years. I would love to hear what you guys think because I agree with you. I agree with you, Om. I think there's a lot to be positive about. There's also a lot of junk.
Om: Yea, there is and you know the great thing is, is where there is junk, there's an opportunity.
Leo: You play Pokémon Go, Om?
Om: Oh, love it.
Leo: Yea, it's fun, isn't it? Yea, who would've thought. It came out of nowhere, right? I was in San Diego on Thursday night, driving down Coronado which is a long peninsula leading to a naval base, and there's, on Orange Avenue there's a median strip and apparently just by active chance and Niantic, there are I think three or four Pokéstops and a Pokégym in one small area. In fact, every time we drove by it we noticed there were lures on the Pokégym. On Thursday night, must have been 10:00 PM, we'd gone to see a play and we came out of the play, took an Uber home. There are—it's like Woodstock. There are, it is—I'm looking at Lisa. "What's going on?" And we realized they're all going like this. They're all swiping up with their finger. There are literally in a tiny area, a thousand people jammed together playing Pokémon Go. $200-million-dollars in one month in global revenue. One month. Maybe that's the next big thing. Anyway, your next big thing when we come back.
Leo: First, let's just briefly say, you've got to back up your data. I get calls so often from people who say, "You know, there's something on my phone or on my hard drive. I have pictures. The drive died. What do I do?" And I have to say, "Didn't you, haven't you—do you not have a backup?" How could you not in this day and age have a backup? And really, the best backup should be cloud backup, right? I mean it's great to have a local backup. I do it all the time. But ideally you have a backup that's stored offsite so if the worst happens, a fire, a flood, someone comes and steals your stuff. The easiest way to do this is Carbonite. Carbonite online backup. This was created by David Friend, a good friend of mine. I really like this guy. He had a—I think he created the ARP synthesizer. Kind of semi-retired, he had a daughter in college who called him up and said, "Daddy, I just lost my term paper. I don't have a backup. What do I do?" And he thought, "With all the things we've solved in personal computing, we haven't really figured out a good solution for this." So he founded Carbonite, automatic, continuous, offsite backup. Cloud backup. And he did it right, too. He made it flat pricing, flat fee pricing. So you don't have to worry about how much have I backed up? How much am I storing? What's the bill going to be next month? You pay once a year, $59.99 for everything on a computer. That's less than $5 bucks a month for your Mac or your PC, but they have server backup. They do small business, big business. They have a plan for everyone. This stat just depresses the heck out of me from the Carbonite website. 30% of people have never backed up anything ever. And I'd say twice that number are backing up in a way that's not going to work. They're not going to get their data back. You got to try Carbonite. And with ransomware all over the place in the Windows space, Carbonite is the solution because it does versioning in Windows which means you will never have to worry about ransomware. Over 500 billion files backed up and counting, one and a half million homes and business. You've got to try it. And you can try it for free. You don't even need to give them a credit card. Just go to Carbonite.com and use the offer code TWIT. The only reason I want you do that is that way you get two months free if you decide to buy. Automatic cloud backup. You can check in with your data anytime you want using the Carbonite apps on your smartphone. You can even download and email data so it's kind of like cloud storage, too. Or you log on to your Carbonite account on any computer, there's your stuff. So you'll always know it's safe. Carbonite.com use the offer code TWIT.
Leo: Do you play—for some reason I feel like, David Coursey, you do not play Pokémon Go.
David: I think it's a public nuisance.
Leo: That's what I thought (laughing). I don't know how I knew that. And Philip, I'm guessing you haven't played it either.
Philip: I had to try it. And then I decided life was too short.
Leo: Life's never too short for a great game but the real winner in Pokémon Go it turns out, the battery—smartphone battery sales have gone up 101% in the two weeks from July 10th to July 23rd to year over year doubled. And you know why? Because it kills your battery and people want to sit out there on Orange Avenue and play Pokémon Go all night.
Om: Hey, nothing wrong with that. I'm perfectly fine with something that gets me moving.
Leo: Well I have to say that's the thing I find most interesting when you go down and you see all these people, it's like there's a rock festival going on except it's not. They're just hanging out. And they're talking to each other. There's a great feeling, a great vibe in the air. It was kind of cool. It was really like kind of Woodstock in the middle of just this—and the same thing in parks all around here. Golden Gate Park in San Francisco, Central Park in New York. People are walking and they're talking. So, I'm all for it. It is clearly a phenomenon. Here's a graph from Sensor Tower, estimates of course because nobody's talking, on the top grossing mobile games. Whoops, I didn't mean to scroll down so fast. The good news is Candy Crush Soda, which you thought was doing pretty well, that's the baseline there. That's the pink line. There's Clash of Clans, even better. Here's Pokémon Go which matched Clash of Clans in the first 2 weeks of its release. But then they launched in Japan and the afterburners came on and now according to Sensor Tower, $225 million dollars in revenue.
Philip: Can I ask a dumb question?
Leo: For a free game. Yea.
Philip: Can people participate in the placement of these Pokés? I mean can I start distributing them?
Leo: No. No. Although small businesses have really benefitted from this because you can put a lure up. And a lure attracts Pokémon. And so if you're a small business like we are—we have a Pokéstop right across the street here. I could put a lure on it. If you're a coffee shop you put a lure. In fact I've seen bookstores in town, our local independent bookstores say, "We're going to have a lure at 2:00 PM. Come by, have a cup of coffee, read a book and catch some Pokémon."
Philip: So individuals could do that too.
Leo: Yea, anybody can buy a lure. It's a buck.
Philip: Oh, you buy them. Ah.
Leo: Ah, now you know where the $220-million-dollars came from.
David: So how long is this going to last? What is the fad element of Pokémon Go?
Leo: Is it like Facebook, just a fad?
Philip: Well, Facebook will last longer.
Leo: (Laughing) Facebook didn't—I don't know. Who knows? No one knows. Facebook did an interesting thing that might have been kind of controversial. They just imitated Snapchat. One of Snapchat's interesting new features that was added more recently—you know Snapchat allows you to do video and pictures and message people and the pictures and videos disappear after the people look at it so it's kind of way for young people to send messages to each other more privately. They don't last forever. Young people love Snapchat. Instagram which is—you know, part of Facebook's problem is its audience is aging, kids think it's Mom's social network. They don't want to be on it. Although I think everybody uses it anyway. They might not be thrilled about it. Instagram has a little bit of a younger skew, a lot smaller market. So they've added a feature of Snapchat called Stories. Stories allow you to do Snapchat videos and pictures that last longer and can be viewed again and again. Facebook, I mean Snapchat Stories disappear after 24 hours, so Instagram did pretty much exactly the same thing. Copycats or good move? Evolution?
Philip: Well, Facebook can't win this one.
Leo: Well, it's good for Facebook. I'll tell you what. And by the way, Kevin Systrom who created Instagram and sold it to Facebook said, "Look, yea, we're copying them. We were really impressed with what Snapchat has been able to do and we'd like to do a little of the same thing." I think the only risk is that Instagram works so well, it's just a—you use it all the time, Om. I see your wonderful pictures all the time. Works great as a photo album that you share with friends. You have a risk of making it too complicated.
Om: I agree. I think that they're taking a big risk but that's what Facebook does is they take a lot of risk. They do things which are not really appealing to their customers and they will—
Leo: But a lot of it's copying stuff, right? They copy stuff all the time.
Om: They have not been able to invent a single new internet behavior. So it doesn't matter whether it's a copy or not, that's the power of being a big platform is that you can copy and hope that it will work. So actually they did a pretty decent job of this new app. I'm not a big fan of like having two different things at the same time, like Snapchat and Instagram at the same time. But it's still a pretty decent job of producing an app. And let's see how it goes. I still like to use Snapchat because it only has a few of my friends and I'm happy to share with them all my personal stuff and not just randomly share it with all these like 25,000 plus people who follow me on Instagram. So for me that's going to be an added advantage, privacy is an added advantage on Snapchat.
Leo: Last week we talked about the fact that Theranos' founder and CEO Elizabeth Holmes was going to go into the lion's den, present at the American Association for Clinical Chemistry's annual convention in Philadelphia. People thought, "What's she going to do? Defend Theranos?" which is being investigated now for fraud. And instead she pulled a little clickbait-y kind of a bait and switch. She didn't talk about Theranos' diagnostics, their blood diagnostics at all. They pitched a new technology called the miniLab, a device the company says will be able to perform blood diagnostics remotely. "It's the next phase of our company," said Elizabeth Holmes. Wow. That's ballsy.
David: Would that be the phase that actually works?
Leo: (Laughing) you know, I think that's great. Under it, this is jujitsu. She went in the lion's den and went, wah, wah, wah, and fhew - they did something else. I mean I'm not a fan. I wouldn't invest in Theranos but interesting. Any thoughts? No. How about the company that just got approval from the Federal Aeronautics Administration to go to the moon? Moon Express just got approved. Mission approved they say to send an unmanned rover to the moon. The first private company to venture beyond earth's orbit.
Philip: And do they think they'll make money?
Leo: I don't think there's any money on the moon. They want to do commercial lunar exploration. Maybe there's valuable resources. The problem is getting them back. It's easier to get them back than it is to go there in the first place but—
Philip: Yea, the gravity's less.
Leo: Right. The real cost is launching, right? They got mission approval from the secretary of transportation and the federal government will help provide supervisory obligations under the Outer Space Treaty and they—I don't know if it's going to be 2017, the first commercial lunar mission.
Philip: I'm not sure that's the technology that's going to really change things.
Leo: And I have to say, when I see the picture of the president and CEO of this company, Bob Richards, I have to wonder (laughing), is this the man that's going to take us back to the mon? Really?
David: The man with a Zeppelin in his hand?
Leo: He's standing in front of course of the big Zeppelin hanger in Mountain View that was part of NASA Ames. I think Google now leases it for—
David: Oh, the humanity of it all.
Leo: (Laughing) and with that, with that image in our head, we wrap up this edition.
David: Is that a Zeppelin in your hand or are you just—never mind.
Leo: Bob Richards.
Philip: I did think, Leo, about your question, about—
Leo: Oh, I forgot. I forgot. Ok, let's wrap that up. You know, thank you very much, Philip, for saving me. Because I would have gotten home tonight and went, "Oh, I forgot. We were going to talk about the next big thing." So each of you can wrap up the show with your idea. What is the next, where is the next big thing coming from, Philip?
Philip: I think we might all say the same thing. I think the self-driving car, as far off as it is and the resistance that we're going to experience getting there, has the potential to disrupt so many things starting with truck drivers. I mean more people may be displaced out of work by this than anything if it happens. And on the other hand, a lot fewer people are going to end up road kill.
Leo: Good point.
Philip: So, there you go.
Leo: Do you agree, David Coursey? What's the next big thing?
David: Security problems, maybe for the election.
Leo: Oh. You know I think you're absolutely right, and actually I do believe that the Republican Campaign is setting the stage for, if it doesn't actually happen—we're using a lot of voting machines which are horrifically insecure and I think we're going to see a drumbeat from Mr. Trump's campaign that the election will be thrown because of it.
David: Whether he, especially if he doesn't win that election.
Leo: Well if he wins, I don't think he'll raise the issue.
David: Oh, he's raising it now. We'll have about 40% of the vote that's going to believe that the election was stolen from them and that is the kind of thing that undermines a democracy really badly.
Leo: Who was it? Was it Bruce Schneier? One of our great—maybe it was Brian Krebs. I think it was Schneier who said, "We must today eliminate electronic voting." You know, the computerized voting machines. "There are far too many in use and they have far too few security protections. Computerized voting," and this is interesting from a technologist, but a security expert, "is a terrible idea. And we've got— "Yea, there it is. Bruce Schneier, The Security of Our Election Systems. He called for basically eliminating them now before this becomes an issue. That's not going to happen unfortunately.
Philip: I think when Trump said the election is rigged I think he was talking about the Electoral College, not Russian cyber—
Leo: You know, it could be. There's a lot of ways to interpret it. We'll just wait and see what happens. If he wins, then it's ok.
Philip: If he wins then we're all in—
Leo: How about you, Om Malik? What do you think is the next place to look for that special paradigm shift?
Om: Oh, I don't know about that. I think there is still so much more which can be done with software and all the new emergent data streams on our planet. I think we've only started to digitize inanimate objects. We've just started doing next in the third world. Things we don't even know what will be the next big thing. All I know is that everything which is in the future offers a massive potential.
Om: I'm talking about potential, not making predictions. I think—
Leo: It's hard to predict because by definition a paradigm shift is unpredictable. It doesn't—but I agree with you. I think Skynet is the next big thing and hold on to your seats because when you get all that data together with huge, massive computational capabilities, the results may surprise you. And on that clickbait-y note, we will wrap up today's show. What a pleasure. Always a thrill to have you guys on. Philip Elmer-DeWitt. He's at ped30.com. That's his new Apple 3.0 site. Going well. You can subscribe but—he's doing the same thing Ben Thompson does, right? You were inspired by Ben I think.
Philip: Yea, a little different. He does one free post a week. Mine go free after 3 days.
Leo: Ah, I like that. So if you don't mind reading it a little later you can read it. But if you want to read the latest, you subscribe. How much is a subscription?
Philip: $10 bucks a month.
Leo: Good deal. Very good deal. I wish you all the best. I love seeing, as I did, people kind of leaving the mainstream and creating their own business out of it. I think that's definitely the way to go. So, thank you, Philip.
Philip: My pleasure.
Leo: David Coursey has nothing to promote, nothing to plug. He just comes on out of the goodness of his own heart. It's always a great pleasure. Oh, I know. You want a microphone.
David: I will live without a microphone. Obviously I have one.
Leo: (Laughing) I'll send you one. Do come back soon. Really, nothing at all you want?
David: Not right now. I'm working on something. And gee, I'm hirable, but I'm working on stuff.
Leo: I like that working on something. You can follow him on Twitter @techinciter. Not insider, inciter.
David: Except I don't Twitter very much. I'm not a big Twitter fan.
Leo: Well, then forget it. I don't either.
David: Find me on Facebook.
Leo: I may respond to people on Twitter once in a while but I just, I don't spend a lot of time there anymore. It's not where I'm watching the Olympics, let's put it that way.
David: I talk to you on Facebook.
Leo: Yea, Facebook. I respond to Facebook Messages actually.
David: Yes, you do.
Leo: Nothing else. Don't try to—
David: Well thank you.
Leo: Yea. It's always good to see you, David. Thank you. Let's hear a little bit more about P-I dot C-O. That's Om Malik's blog. I didn't know about it but you've been interviewing some great people.
Om: Yea, I just feel that after being immersed in tech for so long, I wanted to interview people whose professions or whose ideas bring together art, architecture, culture and technology together. So this has been a fun series—Liam's the guy who taught me a lot about logistics and Chris Young talked—you know Chris who is the latest interview, he taught me a lot about the future of food and you know kitchen and what connected kitchen looks like in the future. And sous-vide and stuff like that. So he's a chef. He's also an inventor and he wrote a book called The Modernist Cuisine. So it's just like great, great people I get to interview and have smart conversations with. And there is no real agenda behind it. I just like doing these conversations with smart people. This is not on my website. This is not in my publication. This is just people I love and love to talk to.
Leo: I think that's so great. That's one of the reasons I love doing Triangulation. One of the reasons I love doing this show, it's really great to get together with interesting people with great minds and just talk. There's a lot to be said for that.
Om: Yea, I don't really professionally write anymore, so I don't want to make advertising as source of income ever again. I think it hurts my thinking and like I don't want to be part of it. But I write for the New Yorker now which is really lovely.
Leo: Love your New Yorker articles.
Om: And they, the editors are amazing. They push me. They taught me new ways to think about things and how to write better. So that is fun. But I really, really-- pi.co is where I put a lot of personal spare time into. And you know, I'm going to start doing a podcast in a couple of weeks. We call call it pi.co cast and same entries that you read, I will also have them in audio form as well.
Leo: I'm excited about that. Welcome to the club. That's great.
Om: I'm learning from you, Leo.
Leo: It's a great—you're not. I know you're not, but ok, thank you for saying that. But I'm really glad you're doing it. I think that's fabulous. Will people, if they go to P-I dot C-O (pi.co) find out about the podcast when it comes out?
Om: Yes, they will and hopefully I'll send you a link and maybe you could offer some feedback as well.
Leo: And you can come back anytime, all three of you. Always a pleasure. We do Triangulation—Triangulation. We do TWiT every Sunday afternoon, 3:00 PM Pacific, 6:00 PM Eastern time. That's 2200 UTC. If you want to watch live you certainly are invited to be on the live stream on our website, twit.tv/live. We have a secondary stream with a different player for people who have trouble with that one, it's live.twit.tv. You can also watch live on—there's a lot of platforms for watching live on Apple TV, on Roku. Pretty much anywhere you want to be. Just look for the TWiT app. There are many, many TWiT apps out there. We didn't write any of them. I just thank our great community for writing those. If you're watching live you should join us in the chatroom too. IRC.twit.tv be part of the conversation. It's always great to have you there. You can even be in the studio. We have a live studio audience and a nice studio audience this week. Just email email@example.com. We'll make sure we get a chair out for you. And you do want to do that because we only have how many more weeks here? Two? One more week in this studio? Yesterday we had a couple come by, they said, "We're sorry we're late. We went to the new studio." So that was a little premature but we are moving. Our first show from the new studio will be August 21st. The new studio is still in Petaluma, it's just a few miles from here. It's not far. And we could give you directions if you email firstname.lastname@example.org we can make sure you get here and we have a place for you to sit. I don't yet really know how big it will be. My sense is that we can easily get the same size audience in there. But we'll have to—we don't know yet. We have to see. So, again, we're going to be here on the 14th and that's going to be the—next week the last TWiT in the Brick House Studios. We will be in the Eastside Studios, the new Eastside Studios starting on the 21st of August 2016. Huh? This is the penultimate show, ladies and gentlemen (laughing). We're just looking for ways to use that word in an English sentence. Thank you, thank you all for being here. Of course if you can't be here and you get confused about the time or where we are, it doesn't really matter. We're on the internet. Just subscribe. Make sure you get every episode. You'll find more at twit.tv our website or wherever you get your podcasts from. Thanks for joining us and we'll see you next time! Another TWiT is in the can.