Windows Weekly 839, Transcript

Please be advised this transcript is AI-generated and may not be word for word. Time codes refer to the approximate times in the ad-supported version of the show.

Leo Laporte (00:00:00):
It is time for Windows Weekly. Paul Thurrott here. Richard Campbell's here. And <laugh>. So is the quarterly results for Microsoft. The yearly results are in too. You won't believe how much money Microsoft made. How much does AI cost? Is it a profit center? And what is Microsoft's new billion dollar business? All that and more. Coming up next on Windows Weekly. The show is brought to you by Cisco Meraki. Without a cloud managed network, businesses inevitably fall behind. Experience, the ease and efficiency of Meraki's single platform to elevate the place where your employees and customers come together. Cisco Meraki maximizes uptime and minimizes loss to digitally transform your organization, Meraki's intuitive interface, increased connectivity and multi-site management. Keep your organization operating seamlessly and securely wherever your team is. Let Cisco Meraki's 24 7 available support. Help your organizations remote, onsite, and hybrid teams always do their best work. Visit Podcasts you love

Speaker 2 (00:01:10):
From people you trust. This is twit.

Leo Laporte (00:01:20):
This is Windows Weekly with Paul Thurrott and Richard Campbell. Episode 839 Recorded Wednesday, July 26th. 2023. Velcro and Tang. This episode of Windows Weekly is brought to you by ACI Learning. Keep your team's IT skills current visit go dot aci Twi listeners will receive at least 20% off or as much as 65% off an IT pro enterprise solution plan that's based on the size of your team. And when you fill out their form, you will get a proper quote tailored to your needs. It's time for Windows Weekly, the show where we cover the latest news from Microsoft. And yes, this is an earnings week. So earnings learnings for today. On your left, Mr. Paul Ott from He's also in Mexico City, Mexico. On your right. Richard Campbell, also North America, but this time mm-hmm. <Affirmative> Coquitlam, British Columbia, host of runners radio rocks. Hello, you two.

Hello. Hello? Hello? Hello. Did you get up at 4:00 AM to watch Samsung? Un un unrested? I did not. You couldn't care less, nor did I, nor did I, but I did order the flip phone. 'cause I, not the folding phone, but the flipping phone. 'cause I I'm a sheephole and I saw the ad and now I have to have it. No, I just wanna try it out. I think it looks pretty sweet. Okay. Enough of that. No more of that. Yep. Let's go right to the earnings learnings. Was it a good, was it a good quarter? <Laugh>?

Paul Thurrott (00:03:01):
It was a, excuse me, I'm all choked up. Such a good quarter. It was a great quarter.

Leo Laporte (00:03:06):
Such a good quarter. How good was it? Yeah.

Paul Thurrott (00:03:11):
I'll tell you how good it was. I spent three hours this morning feverishly writing a an analysis of the earnings and with the hope of figuring out where they're paying for ai. And I have to say, I, I don't do this a lot with Microsoft, but I got the answer. Wow. So it was kind of fun. But just to the earnings let's see, what's the top

Leo Laporte (00:03:30):
Line? Line? They made money, right? Giant pile of

Paul Thurrott (00:03:34):
Money. <Laugh> net income of 20.1 billion in the quarter on revenues. That's profit 6.2

Leo Laporte (00:03:40):
20 billion. Okay.

Paul Thurrott (00:03:42):
26. 56.2 billion. So also the end of their fiscal year. So for the fiscal year net income of $72.4 billion in revenues of $212 billion.

Leo Laporte (00:03:55):
That's pretty

Paul Thurrott (00:03:55):
Good year. Double digit income.

Leo Laporte (00:03:57):
So this is not their biggest quarter. This is a a a smaller quarter compared

Paul Thurrott (00:04:03):
A smaller quarter. Yeah, this was a small one. I mean, they're

Leo Laporte (00:04:06):
Making more than a billion a week profit.

Paul Thurrott (00:04:08):
Yeah, they're doing okay. They announced a new billion dollar business, which we'll get to. Intelligent cloud, biggest business. Right. This is Azure. Right. 24 billion in revenues. Not the first time. It's been over 20 billion, up 15% year over year. That's going gained. How does combust,

Leo Laporte (00:04:24):
Does that compare to a w s

Paul Thurrott (00:04:27):
Well, it doesn't, so Microsoft invents something called the Microsoft Cloud that they used to compare to a w s and I refuse to discuss it because it's been <laugh>. So

Leo Laporte (00:04:38):

Paul Thurrott (00:04:38):
There's, so there. I don't even know the number. Yeah, screw them. Screw that. Well, the reason is they cherry pick parts of their business. Yeah. That could be in off and are in other parts of the business, the other business units. And I just, whatever.

Leo Laporte (00:04:51):
Do they do that to make their numbers look more favorable?

Paul Thurrott (00:04:55):
Yeah, of course. Absolutely. Okay. Yeah, I was telling Richard before the show I wouldn't be

Leo Laporte (00:04:59):

Paul Thurrott (00:05:00):
Richard is still settling into my quarterly mania over earnings. He might want to this medicine that will help. It's gonna take a few, gonna take a few more quarters on you, <laugh>. Yeah. You'll, you'll get used to it. But <laugh>, one of the things that's happened over the years is, and probably not just with Microsoft, but I'm kinda laser focused on Microsoft obviously. So Microsoft has gotten vaguer and vaguer and vaguer when it comes to reporting the financial results of individual businesses or products and things. They, they talk in terms of, you know, this thing, revenue growth was X percent, where you never know what it began at, so there's no way to know what it is. You know, that kind of stuff. So there's tons and tons of that. We're going to go through a lot of it. But anyway, Azure's the biggest part, or intelligent cloud, which is mostly Azure productivity and business processes.

This is Microsoft 365, you know, LinkedIn Dynamics, et cetera. It's basically office, Microsoft and Microsoft 365 18.3 billion in revenues gained a 10% year over year. So those two businesses both grew double digits, which they've been doing. And they are both on this kind of upward trajectory. There was a time back when the business units were all making about $11 billion a piece where they were kind of roughly even mm-hmm. <Affirmative>. So those two have gone from 11 to 24 and 18 billion respectively. More personal computing, which is the third. And the smallest of these has gone from 11 to about 13, depending on the quarter, kind of goes up and down. This particular quarter there were 13.9 billion in revenues. A decline of 4% year over year. And it's, for all the obvious reasons, windows revenue's down PC market stinks. We're gonna get to that Surface tanks hard 20% year over year. Like

Richard Campbell (00:06:34):
Every other PC maker.

Paul Thurrott (00:06:37):
Yeah. maybe worse than every other <laugh>, but yes. In the ballpark for sure. Mm-Hmm. <affirmative>. And then gaming was basically flat. So familiar kind of trend there where Xbox hardware, meaning consoles mostly, but also peripherals down big and software services up to a minor degree. It basically works out to be flat. So that's the, that's the mile high view on Microsoft. I don't dive into all of it, but every quarter I write kind of an analysis about the parts of the business I care about most. I actually skipped over Microsoft 365 this time by mistake, but it still ended up being one of my longest articles on this topic. But I think we can kind of, we can, we can condense <laugh>. So yes. So Windows and Surface are both impacted by the broader trends in the PC market.

Right? No surprise there. Windows revenues from PC makers fell 12% year over year. Lemme see if I can find the numbers. Yep. So, subsequent are the previous sequential quarters, 1539 and 28% drops. So in that sense, hopefully we've pressed that hill. But micro the way Microsoft's talking is they don't actually expect to see any relief anytime soon. And this coming quarter is gonna also doub have a double digit revenue drop from PC makers. So not good there. The commercial stuff is okay for Windows. Nothing, you know, much to say. In fact in, in addition to being vague about reporting on different businesses, the other way they can be vague is by not mentioning them <laugh>. So they've, they've done that all over the place in this report. So with regards to PC sales, for example, they're not separating out consumer and business sales. They're not separating out windows revenues from commercial licenses, which is businesses. We can guess as the reasons why I think it has to do with the fact that Windows 11 still is not seeing strong uptick with businesses

Richard Campbell (00:08:33):
On the enterprise side. For sure.

Paul Thurrott (00:08:34):
Yeah, that's my guess.

Richard Campbell (00:08:35):
I've got a couple of things that's I find interesting. Yeah. One is why did they break out enterprise mobility, whatever that is from Intelligent Cloud, because near, as I could tell, enterprise Mobility is Azure active directory

Paul Thurrott (00:08:48):
Now. Yeah. So the biggest chunk of that is probably what used to be, or maybe it's still called Intune. Right? And when talk about seats, this is the number of businesses that are using what we'll call like a light touch, cloud-based management infrastructure as opposed to full blown, right. You know, this somebody better than anybody. But I mean, just so people listening that's an interesting one because, well, for two reasons. You, and you called it out, why is it part of Intelligent Cloud? Interesting. Mm-hmm. <Affirmative>, I guess because it's a cloud service, right?

Richard Campbell (00:09:15):
Well, and so why is it broken out separately? Like, it's just bizarre that you

Paul Thurrott (00:09:18):
Would talk about, I don't know why, but I, I'll take it to another level and say, why do they actually give us the seats? They actually, this is the, the rare area where we know an actual hard number, which is the literal number of users.

Richard Campbell (00:09:29):
Except we don't know what that number is. We don't know why it's important and we don't know why you told us. I

Paul Thurrott (00:09:33):
Know. I, I, because Windows, which is part of more personal computing has commercial PC or commercial licenses associated with it. Mm-Hmm. <affirmative>, you would assume that this would be maybe in Microsoft 365, maybe being in, I, I don't know. I don't

Richard Campbell (00:09:49):
Know. Well, there's, the thing is you can't use cloud or 365 without it. So

Paul Thurrott (00:09:53):
Actually, okay, I'm talking through this. Lemme guess. Here's my guess. This type of management infrastructure used to be provided by on-prem service servers, right? Windows Serve mm-hmm. <Affirmative>, and then whatever servers you would run on top what, what it called the, well, they still have it. The, what, what's the heavy system managements, or whatever the hell it's called?

Richard Campbell (00:10:09):
System Center.

Paul Thurrott (00:10:10):
System Center, thank you. Yeah. okay. So Intune and System Center followed kind of diverging and converging paths depending on the year. Yeah. But okay. Those revenues are part of Intelligent Cloud because it also includes server, which is kind of a legacy business. Mm-Hmm. <affirmative>, so it's kind of cloud and legacy. So I guess this is because the cloud part of it is, is in or into is cloud and a a D or whatever we're calling it this week is cloud. I mean, that might be, I think that's why,

Richard Campbell (00:10:38):
I guess I'm not gonna say intra. Oh damn. Like I

Paul Thurrott (00:10:40):
Refuse say Microsoft Cloud's not coming out my mouth and whatever you just said. And then I'll, you know, do this every time you say. Yeah, absolutely. Alright, <laugh> one fun bit of news for Windows, sort of the combined revenues from Azure Virtual Desktop and Windows 365, which obviously shares a common infrastructure. This is remote.

Richard Campbell (00:10:59):
Remote, right? Both products. We're still trying to figure out why they're making them. Right.

Paul Thurrott (00:11:02):
<Laugh>. Oh, this, well, here's why. This fiscal year for the first time crossed $1 billion in revenues,

Richard Campbell (00:11:08):
Uhhuh. So this is the new billion dollar business That's right. That they're finally getting,

Paul Thurrott (00:11:12):
Which is nice because it's replacing surface, which I believe is very much no longer a billion dollar business. In fact, it's probably way off of that.

Richard Campbell (00:11:18):
Well, let's talk about the surface side, because why are their hardware sales down? I guess everybody else took the hardware numbers a quarter earlier. Why are theirs

Paul Thurrott (00:11:28):
Later? I think that, yeah, here we have to speculate. So this is, of all the stuff I looked at in Microsoft's earnings announcements, I, I'm, I'm, I, I go through all of it, but I'm looking for specific things, right? Right. There was one item on this particular report where it was literally the sound of record scratch, you know, car screeching to a halt before it hit something and it was surface. Right. And in their actual publicly available report, first of all, they don't use the term surface. Even once the term surface did not come up. Even once in the post earnings conference call, they, they, they've started calling it devices. Mm-Hmm. And the reason is they, well, I dunno if this is the reason is, but they pulled HoloLens into this thing, so now it's surface plus HoloLens. Right. For the most part, HoloLens does not contribute meaningfully in any way with revenues.

Richard Campbell (00:12:17):
No. It's an, it's, it's a niche experimental product.

Paul Thurrott (00:12:20):
So, yeah. So I think when we look at devices, we can kind of say this is, this is a surface. Right? I mean, and we have historical trends to look at. We, we kind of prove that that might be true or whatever devices is surfaces. I refuse, I refuse to call this thing devices, although that's another one of my little mm-hmm. <Affirmative> mental pet peeves. Anyway, there was one sentence, oh, actually I will use the term devices revenues declined 20%. It's all said, there was no context, there was no nothing

Richard Campbell (00:12:44):
<Laugh> what market spaces, what devices?

Paul Thurrott (00:12:46):
Yep. I just, yep.

Richard Campbell (00:12:47):

Paul Thurrott (00:12:48):
There was a chart that showed, and it's funny here again, they cherry pick they don't, they don't show everything, but one of the things they showed, for example, they don't show console sale growth or loss quarter to quarter mm-hmm. <Affirmative>, even though they talk about it. But they did show surface over four quarters. So interestingly, if you go back over the four prior consecutive quarters, sequential quarters surface revenue gains were actually 12 and 2% a year ago. Hmm. But then they declined by 39 and 30% in the previous two quarters respectively. So 20% may look good, but I, you know, when you're looking for the answer, why Right. <Laugh>, so, and

Richard Campbell (00:13:26):
I would assume it's, I would presume it's primary consumer actually.

Paul Thurrott (00:13:29):
Yeah. Pro, yeah. Basically

Richard Campbell (00:13:31):
Also there's been no new hardware.

Paul Thurrott (00:13:33):
Yeah. So I, right. I think it's a mix of issues. So the one thing in the conference call, they did say a few things. This, first of all, the results were in line with what they expected, which is mm-hmm. <Affirmative>. Okay. So you

Richard Campbell (00:13:42):
And what Yeah. What they telegraphed

Paul Thurrott (00:13:46):
They expect another revenue decline. This one's gonna go back up into the 30 percentage is, you know, 30 square on

Richard Campbell (00:13:51):

Paul Thurrott (00:13:52):
Yep. On devices in the, in this quarter. Mm-Hmm. Which I don't mean to say makes sense, but it is the quarter before

Richard Campbell (00:13:59):
The new

Paul Thurrott (00:13:59):
Hardware. The new hardware. Yeah. yes, in some ways it's following the PC market. The surface sales fell harder than the PC market overall though. Yeah. They fell harder than the Windows number, which actually mapped pretty closely to what I D C said, right? Mm-Hmm. <affirmative> 12 somewhere between 10 and 12 or 13% decline. Right?

Richard Campbell (00:14:16):
Yeah. And, and that would've been the trailing indicator because the PC makers announced slowing in sales. Of course, windows is gonna take a hit.

Paul Thurrott (00:14:23):
So I get Now I'll ask you a question because this is what they said. Tell me what you think this means. Microsoft where did say, lemme find the exact quote here. Mic, damn, I can't find it. Anyway, but what Microsoft said was, Microsoft is refocusing surface to focus on higher margin products.

Richard Campbell (00:14:43):

Paul Thurrott (00:14:44):
What could that be?

Richard Campbell (00:14:45):

Paul Thurrott (00:14:47):
Well, <laugh>,

Richard Campbell (00:14:48):
I actually, I don't think hired that wrong. There's no margin if you don't sell any, you can't, you have to sell 'em first. Yeah. Yeah.

Paul Thurrott (00:14:55):
So I, I'm Surface is something, it did actually did not start as a premium PC brand. It didn't. Right. But starting with Surface Pro three, I would argue that's the shift with Surface Pro Four and Surface Book. They were very clear about it. That was the, we're bringing, these are five

Richard Campbell (00:15:08):

Paul Thurrott (00:15:09):
Yep. We're going, we're going premium. This is when they really started to take on Apple Yeah. In the PC space, if that makes sense. Since then, sorry

Richard Campbell (00:15:18):
Man, I would argue that they did that to convince regular PC makers, you need to build high quality gear. Yeah. And we'll give you some room underneath us by being expensive.

Paul Thurrott (00:15:28):
Yeah. But they, but then they did what they did with Lumia once they bought Nokia, which is they really just put out a bunch of low end crap. Yeah. So they, they, I'm not gonna go through each of the products, but it's the surface go stuff, the surface laptop, go all that stuff. It's like this, I then I feel it tarnishes the

Richard Campbell (00:15:44):
Brand. Yeah. I thought they were playing with form factors and they ally, they promptly disappeared too. People didn't buy them

Paul Thurrott (00:15:52):
The Right. So the two sides of the surface are, they want, they believe that they're innovators in form factor space. They're not, they've had one successful form factor. Yeah. And the other side is what I actually ties to that, which is they basically putting on the copy machine and making different versions of the same thing. So they get, you know, pro and go and, you know, it's like whatever. Yeah. So I I, to me, they didn't say this, but I feel like Surface is gonna get scaled back. There'll be fewer models, you'll see fewer updates.

Richard Campbell (00:16:16):
Well, and I would argue they, they've done, they've been successful because the PC market as a whole has innovated on their gear. Like, not that anybody wants a Dispatchable keyboard, but Yeah.

Paul Thurrott (00:16:27):
But that's, that's a

Richard Campbell (00:16:28):
Touch laptops have happened. That's

Paul Thurrott (00:16:29):
Success. That kind of successful doesn't buy you a Ferrari, you know, it just <laugh>, it just gives you a, a good reputation. Like I if Surface exists to sort of like maybe the Knuck did to be a reference design for PC makers follow, I mean, I guess that's a business of some kind.

Richard Campbell (00:16:44):
But, and I, and I wouldn't mind them, I wouldn't be surprised if they continue to just start making a small marquee line. Yeah. Two or three devices that, that represent, you know, substantial form. Maybe one studio style device, like one weirdo form factor.

Paul Thurrott (00:16:58):
I think it makes sense. I I look certainly, obviously we're hoping Surface would be a volume PC player. They're not, they've, they've never been anything

Richard Campbell (00:17:05):
But, but this is schizophrenic. Like, you're either, and I'm misusing the term schizophrenic, so I apologize right off the bat, right. Like this, maybe we'll call it bipolar two face.

Paul Thurrott (00:17:12):

Richard Campbell (00:17:12):
Yeah, yeah. On one hand it's like, we're making marquee devices that by nature is boutique own, sell a ton of 'em. Oh, no. We're trying to be main market. Are you really competing with the PC makers or not? Like how there's a way to live in an ecosystem. Stop messing it up

Paul Thurrott (00:17:26):
Right there. There's this myth that people, well, I won't, lemme not get into that. But there, there's a, the reality is the PC market today, we see great form factor factor experimentation occurring. Mm-Hmm. <affirmative>, especially with Lenovo, right? Yeah. It's done an incredible, it's incredible. Dual device. Amazing. All kinds

Richard Campbell (00:17:44):
Crazy. And, and again, way too many. Like, I can't keep them track. It's

Paul Thurrott (00:17:46):
A little much. Yeah. And they change year to year. But, but God bless 'em. They're trying. And I think that's interesting. So they're sort of satisfying that role. And we're also seeing tremendous premium PCs especially from the market leaders, right? Yeah. Lenovo, HP, and Dell. Mm-Hmm. <affirmative>, you can point to numerous models and what all these companies fantastic. I'm not sure what the role is of Microsoft has to play in this world

Richard Campbell (00:18:06):
Anymore. So Yeah. I think, I think you gotta keep the line functioning well enough to, to at least be a hammer. It's like if you slack off, we'll build a marquee machine and embarrass you all.

Paul Thurrott (00:18:15):
Yeah. So the word surface, like I said, did not appear in any of their public disclosures, including that

Richard Campbell (00:18:20):
You hint that they're gonna phrase that term.

Paul Thurrott (00:18:22):
I find that to be a little weird. You know, the word AI was said 78 times <laugh>, you know, or something, you know, whatever. Okay. and then Xbox and gaming being the final piece of the more personal computing pie, obviously they can't talk too much about Microsoft and Activision Blizzard, although I looked at, I probably have this later in the show actually, but yeah. So I looked at like if Microsoft had owned Activision Blizzard over the pre previous 12 months, what would Microsoft's financials look like? Right. And we, we'll look at that later, I guess. But the, an the, the quick answer is not too different actually. You know, like I said last week, I think some guy said, Hey, do you think they're gonna call the combined company Microsoft, Activision? I'm like, no, <laugh>, no I don't. Activision's revenues in a quarter in the single digit billions. Microsoft's are in the double, they're not even comparable. So yeah. Even within the context of more personal computing, you're looking at the difference between 13 ish billion and two-ish billion.

Richard Campbell (00:19:16):
Right? It's not, it's not the same league.

Paul Thurrott (00:19:18):
No, no. We're not changing the name. This is

Richard Campbell (00:19:20):
Not a merger. This is an acquisition we

Paul Thurrott (00:19:22):
Call it. Yeah, yeah, yeah. So so gaming, you know, not great. The two sides of the two major sides of gaming are of course, Xbox hardware and Xbox content and services, right? Mm-Hmm. <affirmative>, so hardware consoles, software and services is games and subscriptions. Right. I think here we see the past and the future of this business, right? Sure.

Richard Campbell (00:19:41):
The hardware, so hardware hasn't innovated. It is where it is. The X is the unit and

Paul Thurrott (00:19:45):
I don't, and it's not selling well, you

Richard Campbell (00:19:46):
Know. Well, and I would argue there isn't a next generation waiting to be built because we can barely utilize the hardware as a stands. I know.

Paul Thurrott (00:19:53):
What are we gonna do? Like, we're gonna have eight K that isn't really eight K, we already have four K. That's not really four K. What's the

Richard Campbell (00:19:58):
Difference Exactly. And, and, and a two

Leo Laporte (00:20:00):
By four is not two inches by four inches. Gosh darn it.

Paul Thurrott (00:20:04):
In flammable means flammable what?

Leo Laporte (00:20:06):
Regardless. I think <laugh>,

Paul Thurrott (00:20:09):
Yes. They

Richard Campbell (00:20:09):
Should be honest. Not a word <laugh>, but, but it, it speaks to, you know, I talked to folks in the gaming industry that I know well, it's like, it's just too expensive to build a game that can fully utilize a PS five or an X. It is, yeah. It's, it's 300 people for 18 months. If it is the multi-billion dollar game, it's a Hollywood movie. I, I

Leo Laporte (00:20:28):
Felt guilty 'cause I bought our son a 120 Hertz display for his PSS five. And I felt bad 'cause he wanted a 240 hertz display. Oh

Paul Thurrott (00:20:37):
My God. I was like, what are you <laugh>? Okay. I was wondering where that

Leo Laporte (00:20:39):
Was going and well, and I said, you can't have are on

Paul Thurrott (00:20:42):
Welfare Leo seven

Leo Laporte (00:20:43):
Four K and yeah, I know I'm a bad dad. It's

Richard Campbell (00:20:46):
Just a bad father. That's all there is. He's eating gruel, <laugh> <laugh>.

Paul Thurrott (00:20:50):
That's funny. Microsoft didn't, I, I could go back and find this, I think, but they didn't talk about console revenues over a one year period. They did talk about the content services stuff, you know, games and subscriptions over the previous year. So <laugh>, the pre previous Quar, the three previous quarters, this part of the business experienced losses of revenue of six three and 12% respectively. So 3% growth last quarter, and I think five this quarter, this thing's trending up finally. So I guess that's good. Well

Richard Campbell (00:21:25):
It is, yeah. I'm appreciating that when we've talked about this a lot, like the Game pass model, like what they're doing there and what a lot of these acquisitions and gaming are really about building out the Netflix of gaming Yeah. Is working, people are buying it.

Paul Thurrott (00:21:38):
Okay. Yes. But here's the asterisk, and this ties into the vagueness thing I was talking about earlier. Let, let me step down. We have a business unit called More Personal Computing. Mm-Hmm. <affirmative>, this business computing, like this business unit, like I said, encompasses Windows Surface and, and Xbox. We don't know what percentage of each of those make up that 13.9 billion. Right. We can guess, and we were probably correct that Windows is most of it, probably over 50% of it, but we don't really know. Xbox is probably most of the rest and Surface is the small sites. That's a guess. But we don't, can we put numbers to that? No. So we have this vague box that is some percentage of more personal computing. And that part of the business actually has three parts, but the two big parts are Xbox hardware and Xbox software services.

Right. The third party is just called gaming. And it's things that are not Xbox, I don't know, whatever. But let's just say it's those two. Yeah. So we know that hardware sales are going down by revenue percentages each quarter. We don't, you know, okay. And we know that Xbox Software services is now growing, but we also don't know what percentage of that chunk each one is. So if, if software and services is this tiny slice on the bottom and it's growing, it's not even growing big, but percent it's growing big 'cause it's small like whatever, like that doesn't really matter. And if Xbox revenue hardware revenues are big, but not doing great mm-hmm. <Affirmative> it, it still might be more valuable right now to the company. Right. Because it earns more re we don't know. Yeah. This is the, the problem with not knowing,

Richard Campbell (00:23:04):
But Well, and not they haven't disclosed any of this. They don't need to. Yeah. You know, the S E C's happy with what they've reported and, you know, close enough.

Paul Thurrott (00:23:12):
Yeah. But there, that's a great example of what I was talking about. Like, there's no, we can't make intelligent commentary on the relative health of these parts of the business because we don't

Richard Campbell (00:23:22):
Know, really not given the information to do so. Yeah. not to try and jump to the end of this or anything.

Paul Thurrott (00:23:27):
Well, they just like, lemme just wrap this up real quick. So just looking ahead, 'cause I, this is the other important part of all these businesses. Okay. They did bad. How are they gonna do in the future? Bad <laugh>. So overall single digit growth in gaming Xbox content tend services high to mid to high single digits. That's pretty good. Driven by first party and third party content. A lot of good games coming out in the coming, the holiday season sort of starts in this quarter. And Xbox game pass growth. Right. Which is great. Mm-Hmm. <affirmative> by the way, absolutely no guidance at all on console sales. They hid the historical data on that. Although, again, like I said, I could probably go find some of it.

Richard Campbell (00:24:03):
It's, yeah. It's out there.

Paul Thurrott (00:24:04):
But the fact this is a little bit like Surface didn't talk about it. It's like, oh boy, that's a little weird. Yeah. But again, I think the future of this business is the part that's growing and the past is the part that's falling. Yeah. And it's not gonna happen tomorrow, but I think we're looking at the, it's Activision Blizzard, which is gonna bump up that part of the business. Sure.

Richard Campbell (00:24:22):
I mean, I would, and one would speculate what's the only thing that's gonna really revise the game basis meaningfully is a significant change in tooling if these machine learning models for building resources get good enough that the major game brands start using them. You know, interesting. I'm, I'm talking to software developers, not necessarily in gaming in other areas that are really getting involved with large language models and these kinds of tools. And they're talking about 10 and 20% performance improvements. Like, you know, with, we've been using 'em long enough now that we're seeing multiple sprints go by and they're consistently outperforming past development efforts.

Paul Thurrott (00:24:54):
So one of the phrases I found myself repeating as I thought and wrote about this stuff was this notion of something raising all ships, right? This notion mm-hmm. <Affirmative>, ai, you know, whatever. And as you said that, you gave me another example of it, which is, you know, you're, you're talking about major publishers using this, but what, what happens when the democratization of this happens, which it is happening as Microsoft moves copilot GitHub copilot, which we'll talk about in a bit to what they think of as GitHub copilot x Right. Which is a series of kind of three big advances. Yep. can individual developers pay whatever it is, 20 bucks a month and as game developers and maybe start creating games that are more sophisticated, more easily mm-hmm. <Affirmative> and not need to take on all that investment and, and team size and Yeah, exactly.

Richard Campbell (00:25:41):
Maybe we, you, and you mentioned Hollywood, which is all on strike right now. And I think part of it is that we are seeing the democratization of that kind of movie making because of this technology as well. That the armies of people that used to be people making

Paul Thurrott (00:25:52):
Movies on iPhones Yeah. Or the, the C G I that in the 1970s and eighties required a Lucas film or I l m or whatever. And then by the early two thousands, you had things like the new Battlestar Galactica show, which was just completely off the shelf computer generated graphics, which looked great, you know, for the time. And now we can make those ourselves. Yeah. Using off the literally like app store apps, <laugh>. Yep. You know that stuff is amazing. So

Richard Campbell (00:26:20):
Yeah. Keeps going further. Yep. But, you know, the Avar arcing theme here is ai. They, they made this pivot to AI because they needed something new to create buzz and it worked. It worked.

Paul Thurrott (00:26:34):
Yep. And this is the, yeah, this is the thing. Like I said, I went into this, like, we, I'm gonna cover those topics I just blew through in excited fashion. Mm-Hmm. That's my thing. But a this year's been all about ai. Yeah. Microsoft announced the Bing chat stuff in February. Yeah. Since then is it's announced the copilot stuff. So now we have this range and also GitHub, which already exists. So GitHub, GitHub copilot probably from a year ago, maybe even two, I don't remember. But whenever that started, we now have that kind of AI permeating all of Microsoft thing happening, right? Yeah. It's not all there, but it's, it's happening everywhere. No,

Richard Campbell (00:27:08):
It, it seems apparent that Satch Nadella did a Bill Gates type letter inside the company that said, thou shalt build copilots, and every team has had to respond.

Paul Thurrott (00:27:18):
So I, maybe you don't know this. That's exactly what happened. And there were a lot, this happened late last year. I don't know that we've gotten a copy of the full, you know, letter like we used to. No.

Richard Campbell (00:27:28):
Like we did with, with internet tidal wave and trustworthy computing.

Paul Thurrott (00:27:31):
But this is when a lot of the pushback started against AI internally because there were groups I think that either didn't want to or didn't feel they could mm-hmm. <Affirmative> do what he was asking. And of course, there was that ethics thing where I believe leaks at Microsoft led to stories about how Microsoft just disbanded their AI ethics team right in the middle of expanding ai. And that's not exactly what happened. Not

Richard Campbell (00:27:51):
Even close to truth. Yeah. That's the opposite about was true.

Paul Thurrott (00:27:53):
Yeah. So, yes. So anyway, to your point, yes. That ex that did happen mm-hmm. <Affirmative>. but here's the thing. So the February quarter is obviously the first fi calendar quarter of the year. So we get January, February, March this quarter, which is Microsoft's fiscal fourth quarter is our calendar, second quarter. Mm-Hmm. <affirmative>, that stuff is all that. Now it's happening. So there are costs associated with ai, right? This is one of the things we talk about. Mm-Hmm. <affirmative> AI transactions, or whatever you wanna call them, were roughly 10 times that of a standard search query. Where, where, where's the money coming from? Right. So the first thing I did was I looked at the press release and I looked at their insular materials and all that. And the phrase AI came up twice. And one quote from Satch Nadella, he said it in two sentences in a row.

So his stuff was like, forward-leaning, like we think the power of ai, blah, blah, blah, future, future, blah, blah, who cares. So I knew what I would have to do is look forward to this conference call with analysts and press, and I knew, and I was right, <laugh>, every single question would be about ai. Every single question. Yeah. And lots of questions. Lots more than usual, by the way. Hmm. usually they kind of cut it off at some point. I felt like they went longer. Just based on the transcript and just a sheer number of questions all about

Richard Campbell (00:29:05):
Ai, it just means you're asking the questions they want to answer that they kept going. Yeah, there

Paul Thurrott (00:29:09):
You go. Yeah. They were prepared for it, that's for sure. So I wrote probably thousands of words on this topic, and rather than spend the next 30 minutes talking through all of that, I'll just succinctly summarize by saying, the beauty of Microsoft is that yes, AI is expensive, but they can afford it <laugh>. Right. And they're already realizing revenues from it. Yes. there are AI based services up in Azure that are, are generating revenues right now. Right. there are minor revenues coming from the developed brand, right. Github a mm-hmm. <Affirmative> copilot. But this is a lot.

Richard Campbell (00:29:44):
Some people who signed up for co for GitHub copilot. So, I mean, I, I can sell,

Leo Laporte (00:29:49):
I can make revenues by selling bananas in the street. It's not about revenues, but profit, I mean,

Paul Thurrott (00:29:55):
No, we don't talk about, we

Richard Campbell (00:29:56):
Don't talk about, we're not a profit. We're definitely not, you know,

Paul Thurrott (00:29:59):
Listen, I don't know's

Leo Laporte (00:30:00):
Made revenue since the day it started, but it hasn't made a penny.

Paul Thurrott (00:30:04):
Well, like Spotify, same thing. Right? So, yeah. Well, how do they make money volume <laugh>? So the, but

Leo Laporte (00:30:10):
That's the issue, isn't it? This is an expensive product, right?

Paul Thurrott (00:30:13):
Yeah. So this, this has, yes, but here's the thing. So actually this will be profitable, and I'm not saying it is literally profitable, but the way that it works now is Microsoft has enough operating capital to actually just afford these investments. It is that kind of virtuous cycle where their investments lead to new products, which leads to new revenues, which will lead to profits. They're not, they don't say that now. I mean, they, they just started it. They may not say it ever, but honestly, I think AI is so important that they will they kept Amy Hood and which is the C F O Microsoft and Satcha Nadella, the c e o referenced again, and again and again, the importance of AI to Azure, which was its growth model for that unbelievable spurt where their stock price went through their roof. They're the second mm-hmm. <Affirmative> richest company in the world by market cap. All of the growth of Azure speculation, essentially. It's, it's coming back. <Laugh>, we're gonna have a Terminator too.

Richard Campbell (00:31:07):
This is a product that requires cloud. And that's was always the, the issue. Yeah.

Paul Thurrott (00:31:14):
Guess what? We have <laugh>, we have cloud built,

Richard Campbell (00:31:16):
We have a lot of cloud built. You built it big enough to build a supercomputer capable of running a workload that almost can't run anywhere else. Yeah. So, you know, congratulations. That's a, it's a heck of a

Paul Thurrott (00:31:26):
Play Microsoft, right? They have the infrastructure, they have the capital, they have the incentive, they have the capability mm-hmm.

Richard Campbell (00:31:35):

Paul Thurrott (00:31:35):
To BI build all this stuff out. They're one of two to three companies in the world that can do what they're

Richard Campbell (00:31:39):
Doing. Yeah. if, and, and I would debate whether the other two can't

Paul Thurrott (00:31:43):
Even I a hundred percent Yes. I, I, this is the, this is about, Microsoft has a history of saying be the company. This is be the company. Yeah,

Richard Campbell (00:31:52):
Totally. This is the question is, and it, when it comes down to it, I'm pulling up my old startup shops, it's like, so how long is the runway?

Paul Thurrott (00:31:59):
Right? So actually I, they, they're already talking about short term realization of benefit. Right? Right. But the, but, but looking over the next year, they talk about, you know, how much is this gonna cost? They actually provide some kind of hard numbers, you know? Hmm. their capital expenditures, right? This is the money you spend to invest in, you know, physical things is was $10.7 billion in the quarter. 8.9 billion of that Microsoft paid in cash to support cloud demand, which includes its investments in AI infrastructure, cash,

Richard Campbell (00:32:34):

Paul Thurrott (00:32:34):
That they're paying for it with cash.

Richard Campbell (00:32:36):
Well, because they can and because, because they financing's expensive,

Paul Thurrott (00:32:40):
Right. Microsoft generated almost $29 billion in cash in the quarter, and free cash flow was $20 billion. So, right.

Richard Campbell (00:32:47):
The fact that you took a little less than half of that and just paid for it

Paul Thurrott (00:32:51):
Close, you're investing in your own future. Smart. Anyway,

Leo Laporte (00:32:53):
Goes on. And it's interesting because this is exactly the same situation as with search, for instance, search is expensive. Nobody thinks about it, but it takes, but you think they'll be able to turn

Paul Thurrott (00:33:03):
Around. It's expensive. Well, you know what it's like, that's like saying, you know, you're right. I'm not disagreeing, but you know, you, my Apple would make the argument, well, you know, running an app store is expensive. Yeah. <laugh>, but you earn hundreds, hundreds of billions of dollars on hardware. Yeah, yeah. You're subsidizing it.

Richard Campbell (00:33:16):
That doesn't

Leo Laporte (00:33:17):
Cost you anything. Is ai, is the cost of AI all upfront or is it upfront and then ongoing?

Richard Campbell (00:33:22):
It's ongoing. It's

Leo Laporte (00:33:23):
Both. It's both. Yeah. Because you have to do the training that's upfront, so Yeah.

Paul Thurrott (00:33:26):
Well, it's not just so it's not just that. So you're right. I'm sorry. I don't mean I I, when I interject like that, I'm not disagreeing on You're right.

Leo Laporte (00:33:32):
No, no. I, but the other thing I love that about you, you and I have a rhythm of We're on the same.

Paul Thurrott (00:33:37):
Yeah, yeah. We're on the same. We're

Leo Laporte (00:33:38):
Definitely, I do that to my wife. She punches me. So

Paul Thurrott (00:33:40):
<Laugh>, you do it to me and I love it because I'm like, yes. I'm, I'm, I'm like, you're right in my head. Yeah.

Leo Laporte (00:33:45):

Paul Thurrott (00:33:46):
The ongoing cost of AI is tied of that transaction cost, right? It's mm-hmm. <Affirmative> the hardware right now, the infrastructure's very expensive. So one of the things that's happening as Microsoft is building out this infrastructure and offering all these AI services, is that they're trying to lower the cost of ai. Mm-Hmm. <affirmative>, it's the same thing, you know, in a console market, right? We put out a piece of hardware, it's expensive, we're gonna lose money. The goal is, over time, we cost reduce this thing, we make a profit on it. They've never done that. But that's not their wheelhouse. Their wheelhouse is what they're doing right now. And so Microsoft, like Google, like Amazon, and that's it is Desi no, I guess Qualcomm sort of is doing this too, designing data. Well, I know that's <laugh> data, data center based chip sets to handle AI as efficiently as possible. Yes. so that's, that's the long, that's part of the long term play in the, in the short term we're building services and that we can sell to others. And

Leo Laporte (00:34:38):
Is this kind of research also valuable in that we'll get other technologies out of that, like, you know, Tang and Velcro? Or is it, is it really very, very specific? <Laugh>,

Paul Thurrott (00:34:51):
So if there, like, there'll be a branch of Microsoft that's like three M that just kind of Yeah. Shows up double-sided tape. Look, we

Leo Laporte (00:34:56):
Figured out a way to make double-sided tape. Yeah.

Richard Campbell (00:34:59):
Look at this. I, I like the B B A S F example better, because you can watch their commercials, but you do not know what they Well, I,

Paul Thurrott (00:35:05):
What's, so

Richard Campbell (00:35:05):
I don't,

Paul Thurrott (00:35:07):
I, you guys might know the history of this better, but I would say in the case of the NASA related stuff, I think that stuff kind of came out of it. It wasn't a plan in the beginning.

Leo Laporte (00:35:14):
It wasn't, it wasn't the point. Right.

Paul Thurrott (00:35:16):
But there are, there, there are great examples of research organizations starting up, like at and t did in the seventies, the et cetera, with the specific aim of creating future technologies or something, you know mm-hmm. <Affirmative> and but I

Richard Campbell (00:35:28):
Think it's a very reasonable assessment to say now that, you know, you have these Titanic machine learning workloads Yeah. Building optimized hardware

Leo Laporte (00:35:36):
For is money in the bank. Yep. And the byproduct from that Yes. Could be Yes. Unique success.

Paul Thurrott (00:35:42):
It may be on, it may be unforeseen. I mean, I, I, Microsoft built HoloLens didn't really have a clear use case for it. And I think the hope there was we'll put this out in the world and some third parties company, oh my God, this is perfect for this thing that I just invented in my brain.

Leo Laporte (00:35:55):
And it has turned up a few verticals.

Paul Thurrott (00:35:57):
We just, it has turned up. Exactly. Yeah. The impact of AI is gonna be much broader. 'cause It literally hits on every corner of the a ai, you know, the whole tech world. So I think the chances of what Leo disaster, which I'd never thought of is brilliant, is pretty high. Yeah. That's something could come out of this that we never anticipated. It'll probably be in an, an AI life form that subjugates us, but whatever, it'll still be something.

Leo Laporte (00:36:20):
No, we, an anticip made that, what we did anticipate is an AI that would make bubble gum out of tree leaves. Yeah. And there, now you're talking something, right?

Paul Thurrott (00:36:29):
Yeah. We were trying to create this substance that would prevent an oil tanker from leaking oil into the ocean. And we created a delicious gum.

Leo Laporte (00:36:36):
<Laugh> could be a floor wax, could be a dessert topping. If anything is gonna do that, though AI is right. I mean, AI is so, yeah, a hundred percent. Yeah. General, that it, who knows what we're gonna get out of that? I love

Paul Thurrott (00:36:48):
It. You guys have both sent me down a path I never anticipated to.

Leo Laporte (00:36:51):
It's good <laugh>. Yeah. Yeah. Like the like Hansel and Gretel. I hope you leave breadcrumbs on the way. <Laugh>. There you go. Yeah.

Paul Thurrott (00:36:59):
So that's Microsoft's earnings in a nutshell. A

Leo Laporte (00:37:03):
Big nutshell. It's a, a giant nutshell. Mm-Hmm. <affirmative>, I mean, big numbers, good lord. $72 billion profit in a year. I mean, you're doing

Paul Thurrott (00:37:14):

Leo Laporte (00:37:15):
More than a billion dollars a week, and you can Yeah. You'll be able to buy the entire B two fleet, you know, you know, I remember the stories. Those were expensive in the early days of Microsoft when they really, I mean, they started raking it in really fast, really early mm-hmm. <Affirmative>. And they had no, they had no infrastructure. So Bill Gates would just take the money down to a bank and open a cd, and they had, you know Sure. For the, I think probably for the first few years there was a drawer somewhere with a bunch of bank books, you know? Yeah. This is, this is our cash holdings and we can't touch them for a year.

Paul Thurrott (00:37:48):
So I mentioned that John Romero book last week. I'm much further into it. It's fantastic. And I'm gonna get this number wrong, but when they got their first royalty check from doom two, which was their first retail product they got, they got a check. So he brought it down to the bank and it was, I don't wanna say it was $7 million month. Yeah.

Leo Laporte (00:38:05):
I think it was something like that. Yeah, yeah, yeah.

Paul Thurrott (00:38:07):
And he, the guy was like, what the hell is this <laugh>? I

Leo Laporte (00:38:09):
Can't that

Paul Thurrott (00:38:11):
Just deposit. No, I'm not just deposit it. He's like, I can't deposit. It's like, no, it's a check. Like, they had a, there was a discussion at the bank, like, what do we do with this? It's like, guess

Leo Laporte (00:38:18):
You deposit bill tip. If you're gonna deposit a big check, make sure it's a giant novelty check for some. Exactly. Banks don't mind if you bring in a giant that's

Paul Thurrott (00:38:25):
Like, fit in my drawer. What is this? Yeah.

Leo Laporte (00:38:27):
Yeah. It's

Paul Thurrott (00:38:28):
Kind of funny. That's a nice

Leo Laporte (00:38:29):
Problem that, what did they do? They bought Ferraris, isn't it? Isn't that what they did with that

Paul Thurrott (00:38:33):
One? They, yeah. By the way, they bought Ferraris before, well, before that happened. They, they're, they started paying themselves based on the money they were making off the shareware stuff. Off

Richard Campbell (00:38:40):
The shareware side. Yeah.

Paul Thurrott (00:38:41):
And it was, it was, it's amazing. It might've been, it might've been Wolfenstein not even Doom where they mm-hmm. Had so much money. They were like, let's all give ourselves a $107, $107,000 bonus, because the Ferrari wanted was $106,000 <laugh>. Right.

Richard Campbell (00:38:53):
And they, and, and, and how long ago they were tester Rosas and this

Paul Thurrott (00:38:56):
Was, yeah, this was yeah. Tester. Yeah. So those cars today would be close to half a billion probably, or whatever, whatever cars can cost today. But

Leo Laporte (00:39:02):
It's amazing.

Paul Thurrott (00:39:04):
But they, it was just how they, and you know, there were four partners I think for six, and it was like unanimous <laugh>. They all does,

Leo Laporte (00:39:11):
You know, does Microsoft, you think at 30 bucks a pop for copilot make money? Or is that a, is that even that too low to make money on it? I guess it depends on how much you use.

Richard Campbell (00:39:21):
It depends on how many sign up. It's like the

Leo Laporte (00:39:22):
Gym, right? What you want is a hundred people to sign up and only 50 users.

Paul Thurrott (00:39:26):
If it's a hundred percent utilization, probably not. But it's actually, it's maybe a better comparison. 'cause It's digital is how many people use cloud storage. Mm-Hmm. <affirmative>, if everybody sucked up their terabyte of cloud storage would be out. Wouldn't drive, make any sense. Probably not. Right.

Leo Laporte (00:39:39):
It's not enough hard drives in the world, <laugh>.

Paul Thurrott (00:39:41):
Yeah. So, I don't know. I don't know. I, I think, God, all that we can do is speculate, right? Yeah. As to the economics,

Leo Laporte (00:39:47):
It's, its fascinating.

Richard Campbell (00:39:48):
I, but it's clearly it's gotta be millions and millions of users, which they have. This is a question of how many didn't get across the line. So

Leo Laporte (00:39:55):
I think, think

Richard Campbell (00:39:56):
They're making that maneuver.

Leo Laporte (00:39:57):
I think they're betting that this is such a hot thing that a lot of companies will buy it and never use it. This like, oh yeah, we gotta have that. Yeah.

Paul Thurrott (00:40:06):
I it, it is very interesting the reaction you get to this figure because when you speak to individuals, like, write an article on my website or whatever, and a bunch of people just who are individuals, they don't work in it, they're not decision makers of big companies, whatever. They're like 30 bucks a month. Yeah. We go

Leo Laporte (00:40:19):
Per user. That's crazy.

Paul Thurrott (00:40:21):
On top of Right. You have to have, you, you can't even do this on, you have to have like, I think it's F five or higher, whatever the, the tier is. No, it's e

Richard Campbell (00:40:27):
E e one, but an E one

Paul Thurrott (00:40:29):
I thought

Richard Campbell (00:40:29):
Is $36. Right. Okay. So you're literally doubling the price of an E three, which is the most common business. Yeah.

Paul Thurrott (00:40:34):
So they, some of these guys are paying a hundred bucks something a month on per, you know, it's crazy,

Leo Laporte (00:40:39):
But it pays for itself. I mean, you're in a business. I know we do that in a business all the time. You know, we bought, we

Paul Thurrott (00:40:44):
Just bought that. But that, that's, I'm sorry. Keep on,

Leo Laporte (00:40:46):
Sorry. We just bought a $24,000 mixer. Right, right. And as an individual, I'm going 24 k did we need that? Because it, we don't, it was redundancy, but Right. It's a business. And so business, it's something about business expenses. It's not the same,

Paul Thurrott (00:41:03):
It's not the scale. My wife bought a, as you guys know, my wife makes a lot of cocktail. So she bought an industrial <laugh>

Leo Laporte (00:41:08):

Paul Thurrott (00:41:08):
Fruit squeezer, what do you call?

Leo Laporte (00:41:10):
Oh, those things are great. Yeah. We have one

Paul Thurrott (00:41:11):
Of those. So we went to the, we went to the restaurant store. The guy had to get it off the top shelf and he said, do you own a restaurant or a bar? And she said, no, this is just for myself. And the guy goes, nice <laugh>.

Leo Laporte (00:41:21):
So, but in Spanish. So, yeah. That's awesome.

Paul Thurrott (00:41:25):
That's awesome. But, and, but, but for a business when, when you look at this cost, whatever that works out, you know, annually over time, whatever it is, what you're really looking at is how many extra people would you have to employ? How much is not just their salaries, but their benefits and the insurance and all this stuff. And as weird as it may sound to an individual, it actually makes sense. Right. In some, you know, not in every single case. Well, that's the

Richard Campbell (00:41:47):
Thing is, can, can that thing save time to the tune of a dollar a day? Right. That's all of an employees. Yeah. That's all it really comes down to. Yeah.

Paul Thurrott (00:41:55):
And of course, inherently is the benefit of AI is the benefit of all tech going back to whatever steam drains, whatever it is. Mm-Hmm. <affirmative>. Yeah. I mean the, the sort of myopic short-term view is this is gonna close those jobs. Yeah. It is jobs shift because of technology. Mm-Hmm. <affirmative>, that makes sense. But it also enables individuals to be more efficient. Yeah. That means we need fewer of them. Right? Yes. That's a loss of jobs, but it's that kind of balance of pro and con and, and the aim is to end up on, in the pro column when it, when the dust settles.

Richard Campbell (00:42:25):
Right. They say the same way that, you know, a calculator didn't take your job. It was a person with a cal using a calculator to take your job. And a large language novel's not taking your job, a person using a large language,

Paul Thurrott (00:42:37):
The, the shift from fossil fuels to whatever is causing people to lose their jobs. You're in the United States in certain parts of the company, a country, of course, those people are freaking out. And, and when you go to them saying learn, learn how to write software code, you know, that's a stupid thing to say to someone who just lost a livelihood and this business is going away. Mm-Hmm. <affirmative>, it's also a technological advance. This falls into the same category. It's one of those greater good things. Like it's no, it's not good for you. It's not good for this area. But you know, this is unfortunately that the part of progress is things get left behind, you know? Yeah. So it's just a reality.

Leo Laporte (00:43:10):
Let me, lemme take a little break. So we have time for all of our fine advertisers. Mm-Hmm. <affirmative>, but <laugh> we will return with more of Windows Weekly, Paul Ott and Richard Campbell. But I have to pay for that $24,000 mixing console. You sure do. <Laugh> actually, you know who really helps us a lot with the studio. They sponsors a c i learning when we started the year with a c i learning sponsoring these site studios, I think a lot of people said, Ooh, but hey, but you know, IT pro and IT pro is now merged with a c i learning and has made an incr. This is a match made in heaven managed service providers, one of the many bees beneficiaries of a c I learning. Are you an M S P? Let your team be entertained while they train with short format content.

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Paul Thurrott (00:47:55):
Yeah, just I just want to go into a a very detailed accounting of Google's earnings as well. And I'll, no,

Leo Laporte (00:48:01):
No, but how did, how did the Google do? 'cause I gotta talk about it next show.

Paul Thurrott (00:48:06):
I'm, I'm gonna do it in one sentence. And I don't care how many, I don't know. I don't even know. I'd have to go look it up. 79% of Google's revenues come from advertising

Leo Laporte (00:48:15):
Still. It's an advertising business. It always has been. Come on.

Paul Thurrott (00:48:19):
But this factors into the next big topic bucket here, which is ai. And the reason that Microsoft, one of the reasons I should say Microsoft is getting into the AI stuff, which is what does the consumer AI business look for Microsoft? And we'll get to that in a second. I just wanted to say upfront, because this comes up, you know, we sometimes we beat these topics to death. AI and Activision Blizzard have been the two big examples this year. I know for some people it's like, man, you really talk about this stuff lot. Why?

Leo Laporte (00:48:49):
But that's the news. I'm sorry. You don't have to justify it. That's what's Well,

Paul Thurrott (00:48:53):
But I, but let's easily justify it by just saying that in the case of Activision Blizzard obviously it's the biggest acquisition in Microsoft's history. And it impacts just a third, you know, a, a third of a third of the company, if you will. Microsoft's trying to make a big business out of Xbox, which today is, you know, it's okay, but it's not doing great. It, it's, it's impossible to me to think that people don't understand why that's important. But AI impacts all of Microsoft AI is the growth engine that makes Microsoft today look like the tiny Microsoft of 1990 to us today, right? That it, it, this is the growth engine that is going to, this is the rising ships thing. I keep talking about it. It literally gets in, you know, into every part of Microsoft. The company that emerges on the other side of this is a much bigger and more powerful and different company than the one we have today. And, you know, it's, yeah. It's all Microsoft. Yeah. So that's why

Leo Laporte (00:49:49):
Yeah. And earnings are important. But that's, I think it's also important. I think you made a really, to get back to your point, salient point that Google's business is advertising.

Paul Thurrott (00:50:00):
Yeah. So, Microsoft, what is

Leo Laporte (00:50:01):
Microsoft's business? Is it cloud?

Paul Thurrott (00:50:03):
Yeah, it's two, well, there's two sides to it, right? There's the commercial side, which is cloud which is, you know, big. But Microsoft came out with two announcements related to the cost of AI to customers last week or the past couple weeks. One was that the thing we just talked about Microsoft 365 co-pilot's gonna cost $30 per month per user on a top of whatever the other fees are. And Bing ai, Bing ai, it's actually called Bing Chat, but the AI based capabilities of binging will be free. Okay, <laugh>. So what does that mean? Well, it means that binging is going to continue as do other Microsoft services and be ad supported. And this is actually a big deal because in the same way that Apple is moving into services, and as turned services now into the second biggest business, right after the iPhone, Microsoft wants to on the consumer side move more into services.

And it's not gonna make money by selling individual and a lot of money. Microsoft 365 subscriptions OneDrive, extra storage, whatever, not, you know, like you can pay a little bit for Outlook so you don't get ads in the email stream or whatever. Like, that stuff is not generating billions and billions of dollars. But if Microsoft could grow its ad business the way Google and meta Amazon, right? And these other companies have, this could become a next one of the next big businesses for Microsoft. It also, it's the one, it it, it impacts consumers, right? They don't really have a lot of success in the consumer space, frankly, overall compared to the business stuff. So <laugh>, this is, this is something I don't think anyone's ever talked about. You know, that when we complain in, except in peripheral ways, right? So when I complain about all the times that I'm using Windows 11 and Microsoft Edge pops up, even though that's not the browser I chose when I tell you that this mi windows 10 or Windows 11 copilot rather Windows copilot is just an instance of edge.

That's all it is. It's, it's you running edge, even though you don't think you are, so that you can gain access to binging, and that's AI capabilities, but be confronted by Microsoft's tracking Microsoft's online services, Microsoft's advertising engine, right? This is all about bulking up this thing that they want to be a big business. They want to compete with Google. Like when Microsoft says that, we hope that Bing AI will make us more competitive to Google search, what they're really saying is, we want to be competitive with the way that Google search makes money, which is advertising. That's what they're really doing. And I ran into this, I just got, I'll try to get to this quickly, but this was kind of an amazing thing. We all have that version of a story where two of us are talking about some topic, and then we start seeing ads on our phones, and we're like, oh my God, my phone's listening to me.

Or I had the example from two, three years ago where I bought a pair of sneakers, and then only ads for those sneakers would pop up and everywhere online for me, even though I'd already bought 'em. And that's how stupid advertising is. So I wrote an article that I haven't published yet where I talk about this thing that I bought, which I've never mentioned to anybody, and I had to go back on Amazon to find it so I could get the exact name and link to it or whatever. And then over the next several days, I started noticing in my Google discovery feed, which is all tech news stories, in case you missed it, a review of this exact product from nine months ago. It was the only thing like that there were no other, in case you missed it about old things, it was only this one product. It happened every day for free, five days, whatever it was. And, you know, look, conspiracy theory is a fun <laugh>, you know, blah, blah, blah, whatever. But I'm sorry.

Richard Campbell (00:53:31):
Search is not a conspiracy theory.

Paul Thurrott (00:53:32):
Yeah. And this is, and I'm using brave, right? So I can't say that the browser would've blocked what it can blocked, but the thing is, I went to Amazon and looked it up while signed in, right? Amazon grabbed that thing and blew it out into the universe and said, do what you will with this guy's personal information. Kugel caught it and ran to the touchdown and showed me a bunch of stories about this thing, because it found out from Amazon that I was interested in this product, even though Amazon knew I already bought it, and there was no need for me to know more about it. But that's this, this kind of connection, which today I think is stupid, is one of the many, many things we just talked about this mm-hmm. <Affirmative>, which will be made better by ai. And AI could make advertising scary. It sucks, but it's, it could make AI more sorry, make advertising even more lucrative for the third parties that are buying these services from today. Facebook or Meta Google and Amazon.

Richard Campbell (00:54:25):
But I would argue that we're currently in an advertising crisis as it has become quite ineffective and problematic.

Paul Thurrott (00:54:31):
That's so, yeah. But what if Microsoft can, but what if Microsoft can say, look, we did it.

Richard Campbell (00:54:35):
We can make

Paul Thurrott (00:54:36):
This, and our little tiny share goes up to a big share.

Richard Campbell (00:54:40):
Well, and, and any, you know, this whole advertising model was based on you typing in a search expression, right? Yes. You're searching for something, it's product related. I'll show you ads. You think about what people type to a copilot. I know. You know, then that's what value that would have to an

Paul Thurrott (00:54:56):
Advertising. That's what Yeah, exactly. It's so much more. I, I, I <laugh> there's a fundamental disconnect, and this is smart people that mm-hmm. <Affirmative> will just, people just disagree on this topic, I would argue very strenuously. I know it's hard to imagine me arguing anything strenuously. Hmm. that personalized advertising is bad, that you need to stop giving your personal information a way that you should be paid for this. And other people are like, I don't care. I'd rather see something I like than an ad for something I don't care about. And it's like, I'd rather you didn't see any ads at all. But that's, I, that's just a

Richard Campbell (00:55:27):
Self, but you're not willing to pay for the product of being able to find things. So Yeah, I have to, you have to find a revenue stream somehow, but I'm, I'm with you. These machine learning models open the door to more targeted advertising.

Paul Thurrott (00:55:40):
Let me, let me, I, I use this example a lot. I just think this is beautiful. I, I think this puts this in perspective. I want you to think about the future of Microsoft's AI offerings is, is a commercial business, business side and a consumer side. Mm-Hmm. <affirmative>, the, the commercial side is built on per user, per month subscription fees. It's a, it's a Yep. You, it's a kind of a direct model. You, you, you pay for service and you get a service. It's nice. Yep. the other side, this consumer side is advertising based. Conceivably there are far more people seeing these ads than there are people paying for that direct service. Yeah. But the disparity between the revenues you get from the subscription versus the revenues you get from the ads are incredibly vast. Mm-Hmm. <affirmative>, and I see this at th threat dot com with the, the offering we have, right?

I'm sure Leo sees it with twit the Club Twit. Mm-Hmm. <affirmative>, but Spotify, God bless 'em, they're super transparent. And so they give you the numbers. So Spotify, they just announced their quarterly earnings as well. They have 551 million total monthly users, of which 220 million right. 40% are paid subscribers. And three 17 60% are ad supported. Right. 40% of their sub, 40% of their user base generates 88% of their revenues. Exactly. That's the difference. Mm-Hmm. <affirmative>. So you get 60% contributing 12% of the revenues, the revenues that they make are from subscribers is 2.8 billion and a quarter. The revenues they make from ads is 404 million.

Richard Campbell (00:57:11):
Yeah. You might as well make the ads horrible, because I mean, if they took away the ads entirely, why would anybody subscribe?

Paul Thurrott (00:57:17):
So I

Richard Campbell (00:57:18):
Need to make the advertising experience so bad. You want to subscribe?

Paul Thurrott (00:57:21):
Yeah. Some some blogger asked Microsoft if they were gonna charge for binging, and I said, no, never. You know, this, we're not doing that. And so I think, you know, I don't know windows copilot, windows copilot is so dumb, and so just binging that my guests on Windows, but, but according to Microsoft, they fact, generally speaking, they're gonna just do the ad supported route, right?

Richard Campbell (00:57:43):
Yeah. And then the, the question here is always, what are you gonna do with the copilot? How do you make the copilot great? Yeah. which really is how do you provide me information? I would have a tough time finding, either way. Give me a better interface to my goal.

Paul Thurrott (00:57:57):
Yeah. We, you know, we talk a lot about that Stevie Bati moment at Build 2023, where we talked about the three phases in which AI occurs over Microsoft product. First phase, of course, is the side by side, which is the co-pilot mm-hmm. <Affirmative>. And you know, windows co-pilot almost doesn't even meet the standard of that because we already, it already exists in the sense that we can go to a website and get it. We can use Microsoft Edge and have a sidebar and get it. Or we can just we can turn on Windows copilot in the near future and get it that way. Those three things are all the same thing. <Laugh>.

Richard Campbell (00:58:29):
Yeah. But they, they're all the same. That's still LLMs as a search tool, as opposed to LMSs as a navigation through product. Yeah. Like the, the Windows Co-pilot you want is the one that's virtually impossible to build, which is, I describe a goal and you harness available tools for me to achieve that goal. It's not necessarily, you know, a search result. It's, well, we should use this app and that app and like the composition of a goal I think, sorry. And I just think that, that, you know, an operating system is a host for applications. And so if you could describe a goal and it could take your applications and help you get to that goal, that's great. So <laugh>, I just don't think they can make that, that's an impossible thing to make. I

Paul Thurrott (00:59:07):
Wrote a I don't know if it's linked. It must be linked in here somewhere. I, I made the ca well, maybe I shouldn't short circuit this. Lemme just see where, if it's in here mm-hmm. <Affirmative>. but I made the case that I guess it isn't in here. Let's talk about it. That <laugh>, that one of the, no, the thing that Micro got Microsoft in trouble in the late 1990s with antitrust regulators specifically was the bundling of Internet Explorer, what we should call web technologies into Windows. Right? They Right. Intermeshed these things in a way that was unnatural, well

Richard Campbell (00:59:36):
Necessary. They, they would inter Yeah. They said they were intermeshed, whether they were or not. I mean, yeah, I e was always that app,

Paul Thurrott (00:59:41):
But it, it cu culminated in a, an explosion of stupidity with like the internet bar, the, whatever it was called, the channel bar and the active desktop, but whatever. So that's all kind of scaled back, and we did what we did. But, you know, you flash forward 20 years, 25 years, whatever it is, and Windows does, 11 is becoming that thing again. The integration of the Microsoft Co-pilot, which is just Microsoft Edge, the for forced usage of Microsoft Edge for certain things like search highlights results, or when you click on something in widgets is kind of an example of the same thing. There's no reason those things could not open in another browser, but Microsoft has a business reason, <laugh> to force you mm-hmm. <Affirmative> which we may, you know, we don't like, maybe or don't care about, doesn't matter. But they're doing

Richard Campbell (01:00:25):
It. They decided that they, they are digital effluent from using a browser is valuable. <Laugh>.

Paul Thurrott (01:00:31):
I love it. Yes, it is. Effluent. That's good. Yeah. So here we're, again, everything's coming around full circle. We're we're integrating the browser name has changed, but the, but the, I mean, at a high level, it's the

Richard Campbell (01:00:44):
Same thing. I mean, I, I mean, I, I am disappointed. My thought when they went chromium edge was, right. Hey, you're, you're the, the render is gonna be the same. It's the host is gonna be different. Mm-Hmm. <affirmative>, like, I would happily pay a fee to have my effluent contained.

Paul Thurrott (01:00:58):
So Right. To that point, Microsoft's promise, which I read as we're gonna take Chrome, strip all of the Google stuff out of it, end of sentence. Yeah. But left unsaid, you know, was, well, we're gonna put some Microsoft stuff in there to replace it. And you're like, oh, that's okay. I trust my Microsoft account. Syncing browser settings through my Microsoft account is cool. There's no reason not to do that. I was already actually doing it anyway in the past. Right. So, yeah. Okay. That sounds good. But the thing they didn't talk about, 'cause they were busy promoting how it blocks, it blocks trackers and stuff like that, you know, huge UI and all that stuff that actually doesn't do a thing was that they're also replacing all the tracking stuff with their own tracking stuff. Right. So instead of Google tracking you, it's Microsoft. And again, I don't want to get into this kind of, you know, some people think personalized ads are good and bad, indifferent. Like, you could make an argument if you're gonna be tracked, you might as well be tracked by someone who knows what they're doing, right? Mm-Hmm. <affirmative>, maybe you know, I'm

Richard Campbell (01:01:51):
Sorry, this Ian knows what they're doing.

Paul Thurrott (01:01:54):
Google, because they, their ad business is 79% of their, of their revenue revenues. And a big chunk of that comes from this tracking that they do in Chrome and in Android. Right? Right. So yes. I mean, that's, they're, they're really good at it. They've honed this mm-hmm. <Affirmative>, you know so there you go. Anyway, I just I, I think that stuff is kind of interesting and it's so tied to this. All of the major AI players have of met with the White House, and they've agreed to this you know, standards from safeguards and all this kind of stuff. Like, 'cause everyone's afraid about the Planet of the Apes scenario where AI destroys the earth and yada yada yada. And that's fun. But I think the real, the worry that I'm sort, I'm coming to is the thing I just described, that AI is really gonna be used on the consumer end for, to make this tracking stuff work better. Right. It's gonna make it ai, the very nature of this is to take all these data points and pull it into this thing that makes sense. So of course, they're gonna do this on the backend and sell that to advertisers.

Richard Campbell (01:02:52):
Right. At the same, at the same time. It's not even hard to do. All I have to do is convince you to explain to me what you're intending to do. And I have the most useful the information everybody else is trying to derive.

Paul Thurrott (01:03:01):
Yep. And when you look at the White House, they're not guidelines, but the recommendations that we're making for AI safeguards, they're all based on this scary stuff. Mm-Hmm. <affirmative>, the, the word privacy, I think only comes up twice. And it's with regards to this notion that AI should never be used to find out something about a human and then disparage that person online and tell lies about it. That's what the, that's what they mean by privacy. It's not talking at all about the thing I just talked about. Right. And and, and I I'm sure all these AI companies like Uhhuh, yeah. Oh, no, no, we got it. Yep. You want us sit, guys?

Richard Campbell (01:03:30):
That sounds good.

Paul Thurrott (01:03:31):
You, no one's gonna mention the real aim of this back in the corner of the room, you know, behind the curtain or whatever, you know? Mm-Hmm. <affirmative> which is AI's gonna be used nefariously just like whatever technology we have today is used nefariously to make Google into a

Richard Campbell (01:03:47):
And nefarious being an opportunity to sell your, your information for their profit.

Paul Thurrott (01:03:55):
You can just follow the chain of Nobody Reads Yuli. So we agreed to this <laugh>, you know, to where we got

Richard Campbell (01:04:00):
Today. It's, it's just another version of you are the product 'cause you're not paying. Yeah.

Paul Thurrott (01:04:05):
Right. Yes. Thank you. That's exactly right. Alright, let's move beyond the weighty topics. <Laugh>.

Richard Campbell (01:04:13):
Was that a weighty topic?

Paul Thurrott (01:04:15):
I think it is. Yeah. Yeah. The notion that AI is sneakily gonna be used to track you on the internet and then help advertisers actually know something about you. Yeah. I think that is, at

Richard Campbell (01:04:25):
Least we'd have to worry about it taking over the world, though. I mean, I think that's the good

Paul Thurrott (01:04:28):
News. No, that's bill Gates told us last week we're fine. I'm not even worried about

Richard Campbell (01:04:31):
It anymore. Fine. It's all fine.

Paul Thurrott (01:04:33):
From the mouth of Bill to the mind of Paul, it's fine.

Richard Campbell (01:04:35):
It's fine. <Laugh>. Okay.

Paul Thurrott (01:04:38):
So the rest of this AI stuff is not nonsense, but it is just basic news.

Richard Campbell (01:04:43):
It's productization it.

Richard Campbell (01:04:46):
So why the Bing Chat bot existing ch and Safari? I cannot imagine. I know this

Paul Thurrott (01:04:49):
One. This makes me crazy. So when, yeah. So when Bing Chat came out, you had to use Microsoft Edge to go to the website and use it. You had to, right? Now, there were people who figured out work around that, but that, you know, again, they're trying to drive usage of the browser, which drives usage of the services, which drives usage of their adage.

Richard Campbell (01:05:06):
And one would argue that Binging Chat is a way to drive usage of the services still without having to change the browser.

Paul Thurrott (01:05:12):
That's the thing. So, okay. But, you know, this is gonna change over time. You know, people are gonna have workarounds, whatever. So yeah, this week they announced that they were opening it up to users on Chrome and Safari. Mm-Hmm. <affirmative>. Why, why not just open it up? <Laugh>? What, what, what is it, what is it about Brave that? Well, actually, there is something about Brave, isn't there? 'cause Brave Blocks a lot of stuff. Yeah. By default. I don't know, but I, I, it's crazy to just make it available. This, me and three other people use Brave Who Caress <laugh>. It's a, it's a chromium based browser, you know, it's like a, you know, yeah. I'm stealing cable, so what I, I don't that many people do it. You know, I, I don't actually still cable. Anyway, so that happened. I, I don't know. Chrome and Safari are the world's two most popular web browsers.

I if you lump mobile and desktop together, so, okay. Related to this chat, G P T is is has been, I guess it's been available on Android in certain markets. It's available in the US a couple of other markets now. So if you were waiting to do AI stuff on the go, I guess <laugh>, I guess you could do that now. Who cares? And then more interesting to me, and I think maybe to Richard too. 'cause This is basically a, or literally a developer topic. Mm-Hmm. <affirmative> is m Microsoft in the past has talked about something called, well, first of all, Microsoft has a product called GitHub copilot. Right? Right. And this is a way you can, you know, generate code and help get open, arguably the first of the large language products. Yeah. And it's, you know, instead of going to stack overflow or, you know, Googling things, you use this product and it takes the aggregate knowledge of the internet and gives you access. Okay. Microsoft has had a, a plan for the past, I don't know when they announced it, but they, maybe for a year, maybe it was billed last year, but they've been talking about this thing called GitHub, copilot X, which is kinda like the future vision of copilot on GitHub. Mm-Hmm. <affirmative>. And there's three parts to this ai power AI backed chat experience co-pilot for pull requests, and then AI generated answers about documentation. Right. Right. And there's a command line interface and yada, yada, yada. So this past week,

Leo Laporte (01:07:21):
Is there a word X in there? Doesn't Elon own X <laugh> looks like

Paul Thurrott (01:07:26):
Everybody, but Elon owns

Leo Laporte (01:07:28):
X I think it's hysterical. Both Meta and Microsoft have trademarks for X mm-hmm.

Paul Thurrott (01:07:31):
<Affirmative>. So my guess is that GitHub co-pilot in the future will be called GitHub co-pilot. It will in fact change the name, but what will happen is the kind of things that make it up will expand and improve Yeah. And will have that X experience. You, you know, whatever. This week they announced the first of those GitHub co-pilot X vision to reality services. And it's a, it's a, it's a feature of, it's like so many the same words over and over again. There's this the paid service is called GitHub co-pilot for business. Mm-Hmm. <affirmative> also, I'm sorry. There's one called just GitHub co-pilot for individuals. Right.

Leo Laporte (01:08:08):
By the way, that's the definition of ai. The same words over and over again,

Paul Thurrott (01:08:12):
<Laugh>. Yeah. So we're just talking 10 to 20 bucks a month depending on who are Right. Gi <laugh>, they've introduced a feature for, I believe, for both called GitHub co-pilot Chat data. So that's the chat component of X that we were talking about. And the idea there is that you can literally from within the editor of your choice, but Visual Studio Code, for most people, I would imagine a visual studio chat with an AI and not just get code samples, but do pharma or other things, and then have to, I'd have to read the list to mm-hmm. <Affirmative> kind of go through what that means. But what do you know about this, Richard? 'cause You're probably in a much better place.

Richard Campbell (01:08:52):
The Origi, the original product from back in June 22 was really them applying a machine learning model to publicly available code on GitHub mm-hmm. <Affirmative>, so that you effectively could search it more efficiently. What you're seeing it now, what you're seeing now in these next pieces is chat style interfaces, new user interfaces to the services that surround making code, GitHub actions, deployment and so forth. Gen parsing code your own code to write summaries of it. Like everybody runs into the same problem. When it goes to put up a pull request, it's like, what the hell did I just do over the past three days? Like, you don't remember.

Paul Thurrott (01:09:28):
Or even something like, document this,

Richard Campbell (01:09:30):
You know? Yes. Which effectively what you, this is all about documenting ultimately. Right. So the, the fact that the machine can summarize all the code changes you made, and so that you go from that blank screen of what's my polar quest to this is too much detail and I need to edit it. Or it's, you know, mis even misinterpretations, you get rid of the blank screen. The thing that I've found consistently with chat G P T that it's good at is write me a polite way to tell this person to take a hike and then <laugh>, you know, rather than have a blank screen. I have a long thing that I, I I edit down. And, but all, so there's the creating of documentation and there's the interacting with the interfaces. So being able to get into a deploy, into a push, all of those sort of things. Yeah.

Paul Thurrott (01:10:15):
I, the interesting thing to me here is goes ties back to the Stevie Petit thing and the notion of side-by-side copilots. Yeah. And that, that, that's what a copilot is. And this is what this is, because it is a copilot, not on screen, but literally in the editor that you are using Right. Where you're

Richard Campbell (01:10:30):
Working. Yeah.

Paul Thurrott (01:10:31):
Yeah. And, and that's a great Microsoft thing under, that's a,

Richard Campbell (01:10:34):
But you see the three distinct parts mm-hmm. <Affirmative>, there's fetching data from multiple sources to give you ideas. Right. on where to go. Like for instance, fetching code. There's the taking what you've already done and summarizing or expressing it in a useful way. Mm-Hmm. <affirmative>. And there's the interaction with the workspace itself group, instead of using menus and buttons, you know, being able to express it itself.

Paul Thurrott (01:10:56):
Chat, yeah. Conversational chat. Right. I assume there is a part of that first component, which is the fetching of code that will allow an AI to, or this case GitHub copilot to examine the code you've written mm-hmm. <Affirmative> and make it more efficient.

Richard Campbell (01:11:09):
Well, they, yeah. They, and that's a, that's a side of that is getting into, is there refactoring, is there a known pattern for this? Right. You know, when you start to think about what Microsoft's cons, you know, why has Microsoft been successful in this industry? It's the tooling, right? I need

Paul Thurrott (01:11:25):
A developer assistant that is basically my personality. So it's snarky who can say something to me like, Paul, your use of 27 embedded ifn loops is funny. But we were thinking,

Richard Campbell (01:11:36):
Yeah, <laugh>,

Paul Thurrott (01:11:37):
You know, maybe you could go in this

Richard Campbell (01:11:39):
Direction. There's a refactor explorer there. Yeah. Right? And so now you get into what Microsoft's often done, which is this inte sense effect, right. That it's continuously compiling the codes you're writing and marking where it thinks this isn't going to function correctly, this isn't gonna work. So can we step that up another level? Right. There's, there's an interesting angle to this, which is, could I, as a professional developer or known developer, build up a style sheet that is expressed in a large language model that is evaluating your code and saying it's, you know, not complying to this style?

Paul Thurrott (01:12:12):
Yeah. I, I actually, I'm positive that will come, that that has to come. This

Richard Campbell (01:12:17):
Is a big thing, a highly, highly secure coding approach, for example.

Paul Thurrott (01:12:19):
Or even just a corporate guideline thing, which will happen in large organizations with teams, you know? Yeah, I could see

Richard Campbell (01:12:24):
That. And so rather than having it at the end of coding, it's a set of criticisms, you know, in the form of warnings, get you writing

Paul Thurrott (01:12:31):
In the right way the correct way for your organization.

Richard Campbell (01:12:34):
Yeah. That, that it gets you into the pattern of writing it by catching you as you go. Right. The, the way that it grammarly is, you know, constantly marking. Yeah. And

Leo Laporte (01:12:42):
Every organization has its rules for how it wants you to write code.

Richard Campbell (01:12:45):
Going back to this, just a question of when it's enforced,

Paul Thurrott (01:12:47):
This ties exactly back to that thing we talked about earlier with jobs and, and job loss and all that kind of stuff. And this, and be you as an individual become, becoming more responsible because in, in the, today you might have at a big company, a group of people or person who actually examines code and says, Hey, did you read the T P SS report? Yeah. You're not using the style. And yeah. So I guess we're eliminating his job. But the thing is, overall the organization and you as an individual are made more efficient by,

Richard Campbell (01:13:15):
Well, and, and this is what I'm finding, talking to developers who've embraced a bunch of these technologies, is that where they once would've needed a code review or waited or talked to someone else to build a particular piece. The tooling is helping them get through that stuff quicker. And so Microsoft

Leo Laporte (01:13:29):
Was, it's early in that, remember Hungarian notation, Charles, Simon,

Richard Campbell (01:13:33):
These are all mechanisms. And IntelliSense being the classic 25 years old now,

Paul Thurrott (01:13:39):

Richard Campbell (01:13:39):
Getting more and more advanced, it keeps it

Leo Laporte (01:13:41):
Standardized so the next guy can come along and understand what you're doing. And

Paul Thurrott (01:13:45):
Whole Visual Studio today doesn't, I, I don't know if this falls under the onus of intelligence, but you know, you write code in, in full visual studio. Mm-Hmm. <affirmative>, get a little flag on it, you mouse over it pops up and says, blah, blah, blah, this, you know, it will give you these kinds of hints. Yes. This could be more efficient, or, you know, try this. You can, there's a way, a way to format the code that maybe rearranges some parameters in a, in a way that's more efficient, probably for the underlying compiler, whatever it is. And I'm, I'm fascinated by those. I don't always agree with them. Yeah. Right. I always, I actually don't always want to use the, their recommendation, but I guess that's the point. I don't always use grammarly's recommendations either when I write

Richard Campbell (01:14:23):
Sure. It's grammar. Well, one of the conversations I've had over the years with guys, like Matt's targets in and so forth, is what do you do? Just

Paul Thurrott (01:14:30):
Sorry, you on, just, you said mad star C sharp maintainer.

Richard Campbell (01:14:33):
Yeah. The guy who leads C But what do do when you're 12 versions of C in and someone's still writing C sharp like it's 2005. 'cause His code will work

Paul Thurrott (01:14:43):
<Laugh>. Well, yeah, you bet it will.

Richard Campbell (01:14:44):
So, you know, they haven't broken a thing for the most part,

Paul Thurrott (01:14:48):
But actually that, that is one of the instances in which the type of thing I was talking about will come up. Mm-Hmm. <affirmative>, you're using an out of date code style. Yeah. And it will, it will suggest something modern. It doesn't say, Hey, this debuted in C 11 or something. That's why you should, but it will, it will make that suggestion. Yes. And I think that type of stuff, you know, it happens enough to you, you'll just start making it, you'll write it that way yourself.

Richard Campbell (01:15:09):
Yeah. It's starting. And you're exactly right. And, and that's the intent is don't catch it at code review. Don't catch even a compile No.

Paul Thurrott (01:15:16):
Do it

Richard Campbell (01:15:16):
Proactively as you're writing.

Paul Thurrott (01:15:18):
That's right. Yep. Always better to get it right up front.

Richard Campbell (01:15:21):
Mm-Hmm. <affirmative>. So it's, although you

Paul Thurrott (01:15:23):
Don't compiles, I mean, you know, that's fine. Too close

Richard Campbell (01:15:25):
Enough, right? <Laugh>, but it does compile

Paul Thurrott (01:15:29):
<Laugh>. Yes.

Leo Laporte (01:15:31):
Well, that's the difference from idiomatic and compiling. Right. I'm always looking to write idiomatic code. That's the term they use.

Paul Thurrott (01:15:38):
Okay. Where

Leo Laporte (01:15:39):
If, you know, you're writing, if you're writing in C sharp, there's a style way to do it. It has nothing to do with compiling or even accuracy. It's just a style

Paul Thurrott (01:15:48):
Of, it's, it's just a style guide, essentially. Yeah. Yeah. Style guide. And so Google has

Leo Laporte (01:15:51):
Style guides, guides for all their languages. I'm sure Microsoft does too.

Paul Thurrott (01:15:55):
Mm-Hmm. <affirmative>, I don't have the language to describe this properly, but the way I think of it is when I write a, I just want code to be readable. So I don't mind code to be a little more wordy. You know, whatever. I, I, I just wanna, I wanna be able to look at this and know what it means. Yeah. So sometimes when they make the code, you know, the refactoring on you and you're like, I, I don't know what this is, I know what it means. Yeah. I, I would not, yeah. Yeah. I would not have written it this way.

Richard Campbell (01:16:17):
Yeah. When, when I wrote this, it was only me and God, now only God knows <laugh>. That's right. I just hate it when people

Leo Laporte (01:16:24):
Leave a parenthesis alone on a line en list, but just drives me nuts.

Richard Campbell (01:16:28):
Yeah. It should be a curly brace, actually. <Laugh> a

Leo Laporte (01:16:31):
Semicolon at least. Thank you.

Paul Thurrott (01:16:32):
And a semicolon. Yeah,

Richard Campbell (01:16:33):
Exactly. But this is the, we talked today about having sufficient performance and the maintainability represents the larger issue. And so legible code is Yes. Becoming Yeah, I think that's right. I agree. I would rather have more legible, more maintainable code than the highest performance code. So you said we'll often mark up a block that says, okay, I had to make performance compromises in this code. So the reason this isn't legible is that it's very, very fast.

Paul Thurrott (01:16:57):
Yeah. But that in a statement, a a comment <laugh>, so when someone complains about it later, they'll understand.

Richard Campbell (01:17:02):
Oh, yeah. And that's what the comment up front is. Like, you shouldn't understand this code. It was insane to write. Yeah. And nobody really sure how that works. Nobody. Yeah. Right. You don't want that. There's a, there's a very famous piece of Unix code that just showed up the other day as a conversation of literally was marked with a comment that says, this should not make sense to you. Yeah. There's no reason to understand

Paul Thurrott (01:17:21):
This. Please don't waste your time on this. I think

Richard Campbell (01:17:23):
There's a, there's actually, there's a

Leo Laporte (01:17:24):
Title of a book yeah. About coding. I remember reading, I'm trying to remember

Richard Campbell (01:17:29):
The name of the, you know, once upon a time when I did Real Work, and admittedly that's a long time ago, we did a lot of performance tuning on web related stuff, trying to make websites go faster and faster. And often I would mark up a block of code. And the, the classic one is a, is a cash expiry validation where the code seems irrational until you can think in multi-threaded, multi-state behavior, which like three people can do. All I know is how to cut and paste it. And so you would put at the top of the comments, like, if this code doesn't make sense to you, do not touch it.

Paul Thurrott (01:17:57):
Yeah. Don't touch it. No, that's a, that's, that's actually a better, that's a better, that that language to have there, right?

Richard Campbell (01:18:03):
Yeah. It's not that

Paul Thurrott (01:18:04):
You shouldn't understand this. Yeah. It's, you don't understand

Leo Laporte (01:18:06):
This. It's the most famous con comment in the history of Unix. You are not expected to understand this.

Richard Campbell (01:18:13):
Understand this. Yeah. Yeah. That's the one, the context switching code <laugh>. Yeah. And when you read it, you're like, I feel so much better than not understand, because I don't <laugh>. It's, it's, it's like, it's like a line of code and it's horrifying. Yeah. Right.

Paul Thurrott (01:18:28):
Yeah. I love it. But that's,

Richard Campbell (01:18:29):

Leo Laporte (01:18:29):
Not good code. If you're working in a team, that's not what you want. Well,

Paul Thurrott (01:18:32):
It's, hopefully what they, they did was they started out readable and gave up readability to make it more efficient to performance or whatever, but at least document how it works. So you know how you got there. Write

Richard Campbell (01:18:44):
As read, write as legibly as you can. Yeah. And we cannot mark carefully. Right.

Paul Thurrott (01:18:51):
Okay. And

Richard Campbell (01:18:53):
Then Apple. Apple

Paul Thurrott (01:18:53):
And, yeah, apple. We're gonna go through this one in three seconds. Apple is rumored to be working on its own chat, G P T, because of course they're, and well, they're so

Richard Campbell (01:19:02):
Big in cloud,

Paul Thurrott (01:19:03):
They do <laugh>. The thing is, apple is obviously the biggest company in the world. They have tons of data centers mm-hmm. <Affirmative> right now, those things are designed to serve apps to their users and stuff like that. You know, they're online services. They're not really for AI that we know of, by the way, secretive companies. So you never know mm-hmm. <Affirmative>. I guess the two sides of this are, one, never discount Apple. That would be dumb. But two, they always, they usually take time to come to market. Yeah. And they usually pick their time. They usually show up when they can add value. And I guess the, the one negative outcome here could be that this thing arrives like Apple Maps and is a joke. I guess we'll see, I, I would think that that experience would prevent that because it was,

Richard Campbell (01:19:42):
Or the first three Apple TVs

Paul Thurrott (01:19:45):
<Laugh>. Yeah. so we'll see. But I, this is only a rumor where Apple's never discussed it. Apple's developer show came and went with no mention of this in June. So,

Richard Campbell (01:19:54):
And they would be chasing if they had mentioned it. So, and they try not to do do that though.

Paul Thurrott (01:19:59):

Richard Campbell (01:19:59):
Yeah. And again, we thought they were ready with an AR product too.

Paul Thurrott (01:20:02):
Yeah. A lot of my readers, you know look, I'm very critical of Apple. I have my reasons. But a lot of people are even critical beyond, like, where I am. And they would say things, oh, apple is just a copycat. You know, these copy things, you know, like the copy, the MP three player, the copy smartphone, you know, it's like, yeah. They, that's not what they did. <Laugh>. Yeah, they do, they do come into existing markets, but they do it when they can add value and when they think mm-hmm. Of something that's significantly better. And they don't always hit that mark, but they do a lot. No. And sometimes they do hit that mark and consumer, and we're still living with one of 'em today, the iPhone, which is, I, I changed the world, so Yeah. Just don't discount 'em, that's all. Yeah. You might hate, you can hate 'em if you want. I get it. But don't be, you know, don't be stupid about it.

Leo Laporte (01:20:44):

Paul Thurrott (01:20:45):
We either join the Claw Cult or you make fun of the cult one or the other <laugh>. Yeah. Right. I mean, they're wearing white sneakers and they're going to heaven in a spaceship there. But you know what? They might be onto something. I don't know who could say, okay, windows drink this. Yeah, exactly. Yeah. You got the little Dixie cup on the way in there, the Apple star. And you'll be fine. <Laugh>, you'll be,

Leo Laporte (01:21:03):
Let's, let's pause here for the station identification all along the TWIT broadcast network. All right. Continuing on. Oh, wait a minute. I have to wait a couple of beats. 2, 3, 4. Okay. Continuing <laugh>, continuing on <laugh>,

Paul Thurrott (01:21:21):
Unbeknownst to everybody, but Beknownst to me yesterday, <laugh>, the past came and went without a, an area mention of something I was expecting Uhoh. And not, not the earnings which everyone was expecting, but rather the preview version of the update that Microsoft will ship on Patch Tuesday next month. Right. LA this past Tuesday was week D Oh. So they did ship, oddly a week d preview update for Windows 11, version 21 H two, which is the first version of Windows 11. Still supported for October, but not for 22 H two. I'm like, oh, this. And I, and you know, again, every show almost, I'm like, I think, I think I figured out the schedule. I, you know, I document it. I explained why I think it's the way it is. And then every freaking month they screw with it and number they do something. So this one I think was just a one-off, no big deal. But they actually released it today. In fact, they released it while Leo was doing the ad, the prev, the first ad in the show. That's, that's

Leo Laporte (01:22:14):
Why I do 'em. I put 'em in there. Yep. To give Microsoft a chance to ship.

Paul Thurrott (01:22:19):
Yeah. So I didn't, it obviously I have to reboot. Alright, so here's the deal. This year, I, without exception, he says asterisk. 'cause I'm not a hundred percent POS positive, but I believe there has not yet been a preview update of a Patch Tuesday update that didn't include at least one new feature one month. It was one new feature. It was that switch in windows update to get the updates early. Remember, that was the one month, it was one feature. But this month they just shipped it. Today. There are no new features. Lots of fixes and updates. Things like you know, updates and issue that blah, blah, blah. Or does a something, something, you know, this update makes bright brightness settings more accurate, that kind of thing. But not, there's no, there's no like, feature I can point to.

So I don't know if it's because kind of lurching toward 23 H two slash moment four, but I believe this is the first month coming. The next month will be the first month where we have a patch Tuesday without a, a new feature in Windows 1122 H two, I think. So there you go. Well, it's almost Windows 23 time, right? Yes, it is. Because <laugh>, last week they shipped a, a new bill to the Windows Insider beta channel and said, this is going to be Windows 1123 H two. There you go. So they're back that we are now barreling to that. And there are new features coming into that. And so remember we talk about, I just said it, but this notion that moment four, which would've been the next quarter quarterly release for Windows 11, version 22 H two is the same as Windows 11, version 23 H two.

Because that release is being released as an enablement package, which is a very minor update, will expose new features that have actually been shipped under the covers and previous updates. It's just like a mo it is a moment. It's a moment. So we're gonna get that new file explorer home view that has looks a lot like if you've ever been to, they have like recommended things at the top and templates and favorites and recents and all that stuff. Kinda like the office slash Microsoft 365 app and Windows is like that. And then a bunch of minor stuff. Dynamic lighting settings windows Inc. Improvements. the new volume mixer, which rips off rips off one of Raphael's tools called Air trumpet windows Spotlight Wallpapers, right? Where you have Windows Spotlight now on the lock screen.

Those pretty pictures. But now you can have them on the desktop, which you can actually kind of do with a theme, but now you can actually get information about them like you can on the, on the live screen. I think that's kind of fun. Passkey support we talked about with that built-in thing on the notification toast where you can get the pa, you know, interact with the Paske and also do like the two F a codes and all that kind of stuff. And then just, you know, small stuff. It's just small stuff. So that's what we know so far. I don't expect to see this change dramatically. I think Windows 1123 H two is gonna arrive rather tamely, I gotta tell you, I have spent the LA literally a year now writing a book about Windows 11 focusing obviously on 22 H two from the get-go, even though it wasn't out at the time.

I, the book just crossed the 900 page mark. The least that Microsoft could change Windows 11 at point at this point, the better for me. Yeah. Selfishly time for new ui. That's what I'm saying. God, I will, I mean, I'm not gonna do physical harm by myself, but it's fair to say my mind goes physical harm to somebody <laugh>. So anyway, the the first explicit release of a 23 H two thing to the beta channel happened late last week. Today or yesterday, I think it was today. They released an update that doesn't add any new features, but it's just bug fixes, which indicates to me this thing is starting to happen. This where they're starting to, you know, it's the very end of July. We're heading right into, into August. This is when it needs to be finished. So that is gonna happen pretty quickly.

Richard Campbell (01:26:05):
Yeah. Okay. Alright.

Paul Thurrott (01:26:09):
What do you, do you know anything about this AM d thing? I, this? Yeah. Okay. Maybe you could talk to this a bit. 'cause This I

Richard Campbell (01:26:15):
<Crosstalk> well, it's very much like sector and meltdown. I mean the, we get you back to the same old problem, which is that you're making optimizations in, in, in caching Yeah. That expose potential vulnerabilities. You're trying, these long C P U pipelines all have similar problems. Admittedly, a M D pipelines are shorter than intel pipelines. Right. and so you try and pre-position data that might be needed for that pipeline so it doesn't have to go through a, in a predictive

Paul Thurrott (01:26:41):
Fashion or whatever Exactly. To speed up the performance.

Richard Campbell (01:26:44):
And it doesn't, at the C P U level, they, that all memory is flat. So there's no concept of a security boundary on it. So the, in any of these contexts, it's possible for it to fetch data that, that a given process shouldn't have a right to access it. Now these are incredibly to, it is hard to describe the vulnerability. Yeah. It would be crazy hard to implement a tool that would take advantage of it, but it is the nightmare scenario, right. Where I could be running a chunk of code in a very restricted environment. But on that C P U and pulling

Paul Thurrott (01:27:22):

Richard Campbell (01:27:23):
It's a memory from anything else that could be running in that C P U. God

Paul Thurrott (01:27:26):
Knows where it came from, but it's sitting there in the C P U and

Richard Campbell (01:27:28):
Exactly. And so now put that in the context of a cloud, right. Where I can set up a VM running in a cloud and I can basically peek into memory of anything else that could be running on that machine from, on any other cloud client. I don't know. And somebody's asking what the name of the vulnerabilities, it's called Zen Bleed. And it is, yeah. I mean, and they not make fun of

Paul Thurrott (01:27:46):
Named after the amd. No, but I, I, I will, I will point out one thing I bet a lot of people forget is that when spectrum meltdown happened several years ago mm-hmm. <Affirmative> Andy, I foolishly, and I called him out on this at the time. Yeah. He sort of bragged that, oh, this doesn't, doesn't

Richard Campbell (01:28:01):
Happen to us. Right.

Paul Thurrott (01:28:02):
Stupid intel. So I, this is a belated bit of karma perhaps. Yeah. I really like a m d I love what they're doing with microprocessors.

Richard Campbell (01:28:11):

Paul Thurrott (01:28:12):
Be careful.

Richard Campbell (01:28:12):
Yeah. This is a very, very large glass house and everybody has their off. Right. That's right. It's like, come on. Yep. So it's the same class of vulnerability. It is very unlikely to be exploited, but the consequences of it was successfully exploited could be extraordinarily damaging. And so you gotta figure it out. And the price for it's a microcode fix, a, which is not difficult to fix.

Paul Thurrott (01:28:36):
This is just a proof of concept right now. This is, there's no known, it's not

Richard Campbell (01:28:38):
Even a proof of concept. There is a speculative vulnerability based on cash exploitation. Nobody's even built a prototype. There's no zero day I'm gonna get

Paul Thurrott (01:28:48):
AI going on that. I bet AI can fill it out, figure it out.

Richard Campbell (01:28:52):
The fix will be a microcode update and it will com and it'll impact performance plain and simple, just like

Paul Thurrott (01:28:57):
Spectrum. So this

Richard Campbell (01:28:57):
Is minor meltdown and meltdown

Paul Thurrott (01:28:59):
And all those. Yeah, yeah. Exactly.

Richard Campbell (01:29:00):
It's the same class of problem for exactly the same reason. Should end up with the same kind of fix. And it's just a hit to performance.

Paul Thurrott (01:29:09):
See what happens. That's what happens.

Richard Campbell (01:29:10):
And this is why we can't have nice things. Right. Well,

Paul Thurrott (01:29:14):
And then just two minor points related, and this is related to the devices business inside of more personal computing at Microsoft, that happens to be surface and HoloLens. And both of these, I'm just like, I don't why I Microsoft is apparently

Richard Campbell (01:29:28):
I need something to buy.

Paul Thurrott (01:29:30):
Oh, well this might be it then. So a surface studio laptop too could be coming this fall. This is the replacement for the Surface book, which is what Richard is using right now. Mm-Hmm. <affirmative>. And honestly it's a nice laptop, but I never used it as a tablet. But the promise

Richard Campbell (01:29:45):
Between me between myself and she who must be obeyed is that when we finally have completed the move, yeah. We will get new laptops. And she works heavily in cad, so she needs horsepower more than I use, aside

Paul Thurrott (01:29:58):
From the screen rotating nonsense. The big

Richard Campbell (01:30:01):
Yeah. This screen thing difference. Well, but

Paul Thurrott (01:30:03):
The big difference between surface studio laptop and surface laptop is the G P U.

Richard Campbell (01:30:07):
Right. Right.

Paul Thurrott (01:30:08):
And you know, it's, it's not like a high-end workstation G P U. We don't know what the next version will have, but it's, you know, for a lot of the work you do, honestly ation, well, it's

Richard Campbell (01:30:15):
More than enough for me. For her, she could probably use even more. But going from 11 gen to 13 gen is not a small skip up. You know.

Paul Thurrott (01:30:25):
Yeah. I mean, I, I I

Richard Campbell (01:30:28):
I, I would hold out for an arm personally, but yeah. I mean, she's currently living on a, on a Lenovo sous on one of the T classes, <laugh>. Wow. And she know it's, it's a beast.

Paul Thurrott (01:30:38):
And it's, it's 11th Jen, you said.

Richard Campbell (01:30:40):
And so she

Paul Thurrott (01:30:41):
Probably has like, like an H series something, something with a GPU

Richard Campbell (01:30:44):
U and That's right. That's,

Paul Thurrott (01:30:46):
Yeah. Okay.

Richard Campbell (01:30:48):
And I, and I dropped a 39 in her workstation and she sure felt the difference. Like that is a smoking piece of hardware priced accordingly. Yeah. so, and there's no way a laptops ever, ever gonna keep up with that of any class. So yeah. And until you start looking at some of the things like the modular laptops where I literally can put one of the RT xs into it, but

Paul Thurrott (01:31:11):
Well, as Leo discussed a couple weeks ago, you're, you're looking at a several months long wait. Easily a framework.

Richard Campbell (01:31:17):
Yeah. My framework is like next year. Yeah. It's, yeah. Yeah. And I, and therein lies the real problem, which is when we finally put the trigger on it, we'll have exactly about a week's worth of, it's

Paul Thurrott (01:31:25):
Like, I don't

Richard Campbell (01:31:26):
Think it's 30, 90 class anyway. It's an a md No, it's a radio.

Paul Thurrott (01:31:30):
No, no. But

Richard Campbell (01:31:31):
Yeah, I'm not, I wouldn't go down a MD path for any of that. Yeah. Just for, for the na I know the product that she's relying on is optimized for R T X. So she wants X. Yeah. So she needs a video. Okay. Yeah. Yeah.

Paul Thurrott (01:31:43):
And I don't,

Richard Campbell (01:31:44):
And, and I'd love to get an arm, my hands on an arm laptop. I mean, I would suffer.

Paul Thurrott (01:31:48):
I'm curious. Laptop. I still think the laptop. Is that 'cause

Richard Campbell (01:31:51):
The battery life, Richard? Why?

Paul Thurrott (01:31:53):
No, it's the mp. Yeah.

Richard Campbell (01:31:54):
Yeah. Just, oh, it's everything. Right?

Paul Thurrott (01:31:57):
It's everything.

Richard Campbell (01:31:58):
And it's also, I, and it appeals to the Ganess. I'd like to be in on that early and yeah. I expect, I expect happens battery life, see what happens,

Paul Thurrott (01:32:06):
Happens. See what they say this fall. By which I mean Qualcomm, and remember timing,

Richard Campbell (01:32:10):
I bought a book one and it kicked my butt as well, right? Oh,

Paul Thurrott (01:32:13):
I went through two of them because they were so bad. Yeah. But I, there's this nuvia influence version of the chip sets that are gonna come out in mm-hmm. <Affirmative> probably next year at the earliest. I just hope it's not late next year. So I, the, I guess the point is Qualcomm usually announces this stuff end of year, just see what they say. Arm is suing them because they're going into PC shifts. That's scary. Yeah. We'll see. So let's see how that shakes out. I wouldn't, I wouldn't get a current gen Qualcomm or anything right now personally, but

Richard Campbell (01:32:46):
Yeah, we don't have to wait. And a question of how long it can stand to wait, but Yep. Do you need new I am ready for new laptop. That being said, I'm pretty close to just paving this thing anyway and 'cause I want to go for the full M 365 curation. The, the new ser the old servers in the server closet will be turned off in the next month. Yeah. Forever.

Paul Thurrott (01:33:05):
Well, you'll realize some benefits from paving it anyway. Like a Yeah. It's not, it's not like you got a new pc, but I mean, it's, you,

Richard Campbell (01:33:10):
It's just a Yeah. It's, it is clearing out the arteries. It's a little bit of a, of an angioplasty. You know, all software is, I was thinking

Paul Thurrott (01:33:17):
About it as more of a colon blow, but this is the same

Richard Campbell (01:33:19):
<Laugh> whatever end you wanna work from <laugh> <laugh>. But, but also you know, it's still got the residuals of active directory in it. And being a peer A V D implementation M three C five machine makes a difference.

Paul Thurrott (01:33:31):
Yep. Oh yeah. Huge overhead

Richard Campbell (01:33:33):
Difference. Yep. Well, I, I did build this new 13 gen workstations. We each got one and those were a d from the outset <laugh>, and could log into the active directory. Right. But they don't wanna authenticate there. They offended it in the cloud. And, and I'm not doing a domain junk. 'cause The domain is going away. It's vintage. It was an updated P D C from 2000 for crying out loud. It still has front page credentials in it, so it'll be good to have that turned off once and for all. Yeah. Right.

Paul Thurrott (01:34:02):

Richard Campbell (01:34:03):
All right. So HoloLens News. I love it. So

Paul Thurrott (01:34:07):
This is, it's a side, it's so exciting. I don't even know what to say to this. I, it's so

Richard Campbell (01:34:10):
Exciting. <Laugh>

Paul Thurrott (01:34:11):
Hu hot in the heels of the news that the Army has determined the HoloLens is absolutely worthless to their needs. They are apparently testing a new version of it. This might be a contractual thing. We knew Microsoft was the only real work going on with HoloLens right now. Mm-Hmm. <affirmative> is improving the thing that they're trying to get to the Army. Apparently some milestone has been reached and now 20 prototype 1.2 goggles have been delivered. And

Richard Campbell (01:34:37):
I, well, and I think they're exploiting the Army to experiment with new hardware, waiting for hardware to, for the enough tos to go by to get the hardware results they want. Hmm. These devices are really expensive. You're not gonna get to update them every year. And so you've gotta get every year. Yeah. You're not four, you gotta get to a chips set. It's been four

Paul Thurrott (01:34:55):

Richard Campbell (01:34:56):
And it has been a while.

Paul Thurrott (01:34:56):
And that, that's, that's the least two tos. Right. And by the way, speaking of rum, I, if I'm not mistaken, all ends two was arm and I, you know, not that HoloLens one was like a barn burner or whatever, but I think the next release is gonna be a significant, you know, performance improvement, I would hope. Yeah. Longer battery life, full field of view, lighter. Right. I actually think going into battle, what would be scarier is people wearing those apple things with the fake eyes on the outside. Oh yeah. I think that would, you know, people go red, you're inward, not is dry here. Because I guess at least one complaint last week about the Activision Blizzard stuff I decided to break out Activision Blizzard into its own section this week, screw You and <laugh>. But I did move it away from the top of the thing.

It's interesting how everything kind of reached a crescendo, actually, we'll get to this. So, but the first thing I did, and I alluded to this earlier, I couldn't find it, but here it is, was I looked at what would, what would the last year have looked like for Microsoft financially if it owned Activision Blizzard and did nothing. Right. In other words, we just take their money, put it in, you know. And I mentioned earlier, you know, good timing with the quarterly revenues that Microsoft's more personal computing business is the smallest of the three that it has. And when you add the revenues from Activision Blizzard in more personal computing is still the smallest business. Microsoft has <laugh>, right? Mm-Hmm. <affirmative> there was one exception and that was the holiday quarter, which makes sense, right? Video games. But it, but by $0.01 billion, like it was, it was, they were basically even, so a, a mere $10 million, is that what you're saying?

Yeah. I think that is what I'm saying. Actually, <laugh>. Yeah, I think that's right. Yeah. So, you know, not counting this score, when I wrote this, this quarter hadn't happened, but Microsoft's revenues over the previous four sequential quarters were in the 50 to $53 billion range. Activision's Blizzards were in the $2 billion range. So Mic Activision Blizzard is by revenue is about one 25th the size of Microsoft. And the addition of Activision to Microsoft improves Microsoft's revenues by an average of 3.85% per quarter. Right. That's how small it is. I mean, again, it's big, but one of the, the weird issues with Microsoft is that it's huge <laugh>, right? It's the second biggest really big. Huge. Yeah. It's really huge. Yeah. One of the things I tried to do is figure out how big Xbox was. Mm-Hmm. <affirmative>, and this is kind of interesting 'cause we know like how big PlayStation is.

Mm-Hmm. <affirmative>, PlayStation annual revenues of about $27 billion over the past year. We know how big a Nintendo is. Right. Nintendo over the same time period, roughly $12 billion less than half the size of PlayStation, by the way, but we're on the tail end of the switch wave. You know, things were different. You know, a couple years ago, whatever. We know how big more personal computing is, right? I said it was roughly 13 billion a quarter. Sorry. Yeah. No, like order, right? So you could add that up to whatever that is in a year, but then we can do this kind of math. Like remember I said we don't know how big Xbox is as a percentage of that business. If we kind of compare things console sales and revenues from games and so forth between Sony and Microsoft.

And we know that Sony sells roughly two to three times as many consoles, and that the ecosystem is bigger. Is is it possible to arrive at kind of a rough idea of how big the Xbox business is? Right. I did some math, I did a lot of guessing. I wanna be clear about this. Not science. But I came in around $17.75 billion. Okay. So I kind of wrote that figure down, and then I went and did some other, we, I was working on some other stuff for this article. And in the report, in the course of research, I came across an article you know, whatever <laugh> claiming that Microsoft's overall gaming revenues in 2023, I don't know if that's fiscal or calendar, it doesn't matter, but very recently was $16.2 billion. So I I Okay. You were in the ballpark. They were in the ballpark.

They're in the ballpark. But the, the, the promise of video games from Microsoft, especially the promise of getting out of its uhm gonna call it a console ghetto in a sense, because the console market is the smallest part of the gaming market. Right? Right. Pcs just surpassed it again, which is kind of interesting. Mobile games, casual games are over 50%. Is those parts of the market in which they don't compete, right? So Microsoft is in PC gaming. I mean, they're not a major player there, but they're there. Mm-Hmm. <affirmative> Microsoft will become a major player in mobile gaming which is kind of interesting that market is not to Microsoft, but that market overall is worth over $50 billion a year. Mm-Hmm. <affirmative> mobile gaming Activision Blizzard earned $556 billion in revenues in on mobile. Nope. Sorry, that's not mobile.

That's cons, consul and PC for Activision, blizzards are about the same over a year. So about somewhere in the 50 billion do, do dollar range, is that right? Million? No, that's not right. I'm sorry. I'm having trouble reading my own numbers. But the two 30, yeah, sorry, sorry. Between 38 and $50 billion between console and PC gaming over a year. Is that, that seems so high. <Laugh>. Yeah. But anyway, that, that's what I have. But where is, I wanna find the mobile numbers. Sorry, lemme find the mobile numbers. So yeah, mobile gaming is the biggest part of Activision business by far. 92 point. How does that add up? Where am I looking it? 90, sorry. This must be the overall market. I'm sorry. Overall market is 184 billion. 92 billion is mobile. Right? Activision Blizzard overall is 8.13 billion in revenues. So just 4.4% of the total Mar gaming market.

Right. Another instance of, yes, big purchase, big company, but tiny part of this giant thing. Yes. Right. Well, it's a very, it's a very fragmented market. I mean, Sony may be the, the monster here, but they're not that big in mobile. They're not at all in mobile, basically. Yeah. So, so here are the real numbers for Activision Blizzard Mobile. 43% of their revenues last year, about 943 million. Thank you. Richards actually that's the most recent quarter came from Mobile. So mobile is split up into two main chunks king Mobile, right. Which is Candy Crush, et cetera, et cetera. Right. It's about 37% of its revenues plus Call of Duty mobile, which by the way, this past year just surpassed $3 billion in revenue over its lifetime. Not over a year, a quarter, but over its lifetime. So Call of Duty mobile has emerged. In fact, I I distinctly remember a point in time a year or so ago where Call of Duty kind of surpassed Call of Duty, like the, you know, the console, right?

Richard Campbell (01:41:31):
The actual

Paul Thurrott (01:41:32):
Game. Yeah. Like, which is really kind of interesting. It's crazy. Console gaming, 52 billion in revenues from Activision Blizzard, and then PC Gaming was about 38.2 billion. So, you know if you look at the biggest gaming companies in the world, Microsoft is actually number two behind Sony, but

I By half. Yeah. By half. And the thing is, when you add Activision Blizzard to it, I should say number three is Tencent. Tencent or 10, however you say that. Tencent. Yeah. When you add Activision Blizzard to Microsoft doesn't change anything. Still, number two, a little closer to Sony, a little further away from Tencent doesn't change the overall picture there, which is one of those arguments we're making. So, you know, it, I, it's interesting how big this is, and yet how small this is. Yeah. Right. Depending, it's all a matter of what, what did one say? It's all a point of view, or how you look at it or

Richard Campbell (01:42:28):
Whatever. Yeah. Matter of perception,

Paul Thurrott (01:42:30):
Matter of percept. Yeah. Stupid OB one. Okay. So there's that. And then also just in the wake of what ha what, you know, all the big stuff we've been talking about for weeks and weeks, it's interesting to me that the Ft c, the head of the F T c Lena Kane and the head of the C m A, who's, I can't think of her name right now, I'm sorry, have both come out publicly and spoken about their losses essentially, right? Mm-Hmm. <affirmative>, the, the CMA has a lost, but they're, they're obviously renegotiating, and I think they've done a, a, a bizarre job of just looking stupid in the wake of all this stuff. But anyway, both are renegotiating with Microsoft. Both are gonna settle with Microsoft, this is gonna happen. And if you look at what they've said, the thing you're never gonna get from these people is an apology <laugh>. Right. I think the, the one thing we can say objectively is that neither one of 'em makes a good argument for stopping this acquisition. Yeah. And neither one of them, thus has any defense after the fact, what they've done.

Richard Campbell (01:43:24):
I would argue they're the largest game studio still stand standing. That's buyable, right? I mean, yep. Sony is a platform. Microsoft's a platform. Nintendo's a platform,

Paul Thurrott (01:43:33):
10 cents EA is in there.

Richard Campbell (01:43:35):
What's that? Well, EAs in the same league, and I would argue that's next, right? EA and Epic would kind of be the Nat,

Paul Thurrott (01:43:42):
Excuse me. Go ahead. So, yeah, actually I wrote about this. So to your point mm-hmm. <Affirmative>, I believe you're correct. And it's not so much like I see Sony buying, which is what Sony should buy. Ea No, I think you're gonna see EA and Epic perhaps link up or there'll be some version of a story where EA starts making acquisitions to make themself bigger and either more valuable as a huge acquisition target. This is more valuable in general, right? This is a this is the market consolidation is very

Richard Campbell (01:44:10):
Natural. EA is not talking to Epic already. I think they're anathema to each other. The, but they're actually a logical fit because Epic has built a steam, like fairly successfully something EA has tried repeatedly to do and failed.

Paul Thurrott (01:44:23):
Yeah. Epic is also, epic came out of that same kind of group of companies that was like Apogee and in software and all that kinda stuff. And those other companies are all part of bigger companies, but Epic is still a standalone thing. And yeah, they're

Richard Campbell (01:44:36):
Doing very well, but they got Fortnite, that's their ringer game. And they, they chose to not just pour it into other games, but to try and pour it into a steam competitor, into the, into a gaming platform, and try and get more games under their umbrella. And, and it's given them perceived value, like the merger of EA and Epic makes a lot of sense. Yeah, I agree. I, I can't see Sony buying anybody that's not Sony's style other than games. True Game studios. They, they, you, they mean they contract their game development out to game studios. And I think there's certain points where they realize that Studio should mostly be working on, or should be working on stuff alone, and they pull 'em in,

Paul Thurrott (01:45:13):
Right? I mean, it's, somebody's gonna buy companies that are either PSS exclusive or the P ps pri or most mostly primary,

Richard Campbell (01:45:20):
But I would argue they would actually buy ones where they want them to stop making other things like exclusive

Paul Thurrott (01:45:26):
Hundred. Yeah. That would be part of it. Exactly. You know, exactly the opposite of what Microsoft did with Minecraft. So <laugh>, you know, so yeah. No, I, there's definitely gonna be consolidation here.

Richard Campbell (01:45:37):
More consolidation. Yeah. And those two together would be interesting. Mm-Hmm. <affirmative>, the other studios are great studios, and, and they, you, I have nothing bad to say about S Soft or Take Two, any of those guys, they're great, but they're very much game, the, the classic studio

Paul Thurrott (01:45:52):
Model and their cost platform. And yeah, it would be too big of a chunk of their revenue where it actually wouldn't make sense to make, which is the argument with Call of Duty, right. To make their best games or any of their games. PS exclusives.

Richard Campbell (01:46:05):
Well, but, but I would also, every one of those studios is working hard to try and make a a, a World of Warcraft, like a continuously monthly revenue game. Like that's always the

Paul Thurrott (01:46:17):

Richard Campbell (01:46:18):
Of all these companies.

Paul Thurrott (01:46:19):
This is, you know, Activision has raid and ordered the nor the game industry, by which I mean, raid and order. That poor bastard spent most of the 1990s trying to fight Microsoft and bought Word Perfect. And yeah. What's the other side? The one of the database package was I'm losing it doesn't matter. And then, you know, failed and sold it all off and, you know, whatever. And, you know, Activision came up with call of Duty and man, everyone tried <laugh> and whatever you know, medal of Honor, which I actually, by the way, proceeded Call of Duty, but the original Medal of Honor team went on to make Call of Duty. So the Future Medal of Honors were from scratch, whatever, different teams, but no one did it, you know, and it's tough, right? I mean, it's a, it's a 10 pole, you know, you get, like you mentioned Fortnite, is that for battle Royale type games? Yeah.

Richard Campbell (01:47:11):
Not the first, but the winner, you know, who's not on the list here?

Paul Thurrott (01:47:14):
Valve, right? That must, I So is Valve. Why is

Richard Campbell (01:47:18):
Val not on the list? It's a simple reason privately held.

Paul Thurrott (01:47:21):
I was just gonna say that was my, is Valve still a private that that's where I was gonna, okay. Yes.

Richard Campbell (01:47:25):
That's, and I have friends who've, who've been in, in inside of Valve, they have a substantial, because they're less than a thousand stockholders in its history. It was always privately funded. And it's been so insanely <crosstalk>

Paul Thurrott (01:47:37):
Came right outta Microsoft, by

Richard Campbell (01:47:38):
The way. Yeah. They, they s the, the SS e c has no jurisdiction there. They do grant stock to their employees, and when those employees leave, they can sell them off. There's an internal market for that stock. But you're talking about a company that revenues in the 15 billion range. Like they're a player.

Paul Thurrott (01:47:56):
I actually don't know. Yeah, yeah. No, they're, Ross is why the

Leo Laporte (01:47:59):
FCC should have won, because all it's gonna happen is this big consolidation now. Everybody said, oh, look, they got away with it, now it's our turn to merge.

Paul Thurrott (01:48:07):
Leo, you, you, you know, you're like the anti-competitive mold that pops up, <laugh>

Leo Laporte (01:48:13):
What we were talking about.

Paul Thurrott (01:48:15):
Yeah, no, I know.

Richard Campbell (01:48:16):
Well, and well,

Paul Thurrott (01:48:17):
But this is not, but this is a natural market. Oh, yeah. If

Leo Laporte (01:48:21):
Nobody, if nobody puts a lid on it, no. But

Paul Thurrott (01:48:23):
Yeah, I mean, go back the early days of the home computers when we had Commodore and Tandy and Atari and Apple and where else, you know, at some point, you know, consolidation occurs in that point, in that market was the pc, and it kind of consolidated into the PC and Mac, I guess. Mm-Hmm. <affirmative>. And it's, I'm not saying it's tell that to

Leo Laporte (01:48:41):
Nina Kahn. At some point consolidation happens. Well,

Paul Thurrott (01:48:45):
It's not, are you calling it Lisa? Consolidation? Is that

Leo Laporte (01:48:47):
Consolidation? Conn

Paul Thurrott (01:48:48):
Lena Kalina consolidation.

Leo Laporte (01:48:50):
Le consolidation,

Richard Campbell (01:48:51):
And we talked about this earlier on, what will actually disrupt the gaming market will be new technology that smaller organizations can home it faster than the big organizations can. Yep. And that looks like these, I mean, routine learning models,

Paul Thurrott (01:49:02):
The introduction of mobile, I think did it, that really shifted the dynamic. And by the way, of course it did. It's the, it's the biggest part of the gaming market. So it's the biggest platform. Before there was an iPhone, it was consoles. Well, it was probably, it was consoles and p PCs and and web, you know, web casual stuff. But yeah, now it shook up the market. It took control of the market, right? Yeah. It's, it's literally the biggest part of the gaming market.

Richard Campbell (01:49:24):
Well, in terms of seats, you know, the, the revenues and the, the, the net profitability of that stuff's challenging. But, and now we get into, again, I think these check giants are gonna have a tough time with these parasitic revenue models.

Paul Thurrott (01:49:36):
I'd like, so we talked about this possibility. We literally up front on the show, this notion that maybe AI could make it possible for individuals or small teams to create sophisticated games, right? Yeah. The, the one for all the problems with the app stores, and there are many problems, and for be, some of them are caused just by popularity. There are too many games. It's still possible for an individual to create a game that could be seen by people on actual mobile devices in a way that is not possible on consoles and PCs, because it, unless it's like a little indie game, that's kind of a cute scroller thing or whatever. But it is, I I, I'm always, I'm just a huge fan of that kind of democratization effect mm-hmm. <Affirmative>, like, I, I, well,

Richard Campbell (01:50:16):
And every time you have a shift in platform, that's interesting, right? Yeah. And certainly mobile with Cloud has opened the door to, and I think when I think about Rick really serious, like could not play any other way. Mm-Hmm. <affirmative>, it's Pokemon Go, right? Yes.

Paul Thurrott (01:50:31):

Richard Campbell (01:50:32):
G p s bound, so location

Leo Laporte (01:50:34):
Matters. Actually. Did you see that the new Pokemon Go came out? It's Pokemon sleep. There's another way to, I'm not, this sounds like a joke, doesn't it?

Paul Thurrott (01:50:43):
Yeah. What is it? I don't even know what this

Leo Laporte (01:50:45):
Played. You played in bed. No, no. It's real in Pokemon sleep. It's, you play it in bed. It's a sleep monitor, and you gotta catch 'em all. I'm not, I'm not making this up. I don't

Paul Thurrott (01:50:56):
Understand. Is it like Freddy Krueger? It's invaded our dreams.

Leo Laporte (01:51:01):
I don't understand. You don't believe me? So I'm gonna show you.

Paul Thurrott (01:51:03):
Is it April? No, no. I believe you understand.

Leo Laporte (01:51:04):
You think I'm making this up? I know you do, but I, but I'm not see Pokemon sleep. It's and you, you get Pokemon by by sleeping,

Paul Thurrott (01:51:17):
But <laugh>.

Leo Laporte (01:51:18):
I know, I know.

Paul Thurrott (01:51:19):
I mean, I'm just

Leo Laporte (01:51:20):
Saying innovation is not dead. I'm just saying.

Paul Thurrott (01:51:22):
I, I, okay. But I feel like maybe this is offensive to people who have sleep apnea. What are we talking about? I don't understand what,

Leo Laporte (01:51:31):
I don't get it either. But the po I think a Pokemon Go is to get people out walking <laugh>. What's to get the sleep? This

Paul Thurrott (01:51:37):
Is Pokemon No-Go.

Leo Laporte (01:51:39):
Yeah. It's from the same, it's from Niantic. I think it's the same people.

Richard Campbell (01:51:42):
Yeah. So it's probably a response to people saying, my kids are staying up all night. 'cause They're still trying to catch Pokemon.

Leo Laporte (01:51:47):
Oh, maybe. Yeah. Oh

Richard Campbell (01:51:48):
Boy. We'll make one that makes 'em go to bed.

Leo Laporte (01:51:50):
Yeah. actually it's, it's Niantic. It's, it's can create something else. It's the Pokemon company. So they partnered with Niantic to make Pokemon Go. Now, now there's, yeah. They're going on their own. And they said what would even be more dynamic than the Pokemon Go Pokemon sleep.

Paul Thurrott (01:52:08):
Yeah. Huh.

Leo Laporte (01:52:10):
That's my app of the week. <Laugh>. You can't, you can't lose. I, I mean,

Paul Thurrott (01:52:17):
I, you can't lose if you don't play <laugh>.

Leo Laporte (01:52:19):
There you go.

Paul Thurrott (01:52:20):
I mean,

Leo Laporte (01:52:22):

Paul Thurrott (01:52:22):

Leo Laporte (01:52:23):
That's innovation. To say that in a nutshell.

Paul Thurrott (01:52:25):
I, it's something I don't know. <Laugh>. Yeah. I guess it's innovation. Yeah.

Leo Laporte (01:52:29):
Alright. I'm sorry. I didn't mean to de derail the conversation.

Paul Thurrott (01:52:32):
I, no, it's honestly, that was more interesting than what I was talking about <laugh>. So I just as the minor point with all the topsy-turvy stuff happening behind the scenes at the Microsoft Activision Blizzard stuff, it's very, we don't understand how these regulatory bodies work. I don't

Leo Laporte (01:52:49):
Know that they

Paul Thurrott (01:52:49):
Understand how they work. Yeah, I don't <laugh>. So the C m A there was a bunch of legal machinations last week where they basically put a halt all of their actions potential actions and, and thus their deadlines against Microsoft, so they can negotiate. But the F T C essentially did the same thing this past week. Bowing to the inevitable you're

Leo Laporte (01:53:09):

Paul Thurrott (01:53:10):
Different process, but same, same that effect. So nothing major to report. But both of these things are positive developments in the sense that, well, not to Leo, but they're,

Leo Laporte (01:53:20):
They're positive. Not to me or my friend.

Paul Thurrott (01:53:23):
Sorry. Lemme let me, let me rephrase. They are I think indicative of the fact that this acquisition's gonna go through. So

Leo Laporte (01:53:30):

Paul Thurrott (01:53:31):
Whatever your take on that is <laugh>. So, okay. Xbox, actual Xbox. Couple

Leo Laporte (01:53:38):
Little things. You know, it's a funny thing about Pokemon sleep. Mm-Hmm. <affirmative>, I'm, I'm just setting it up right now. And one of the things, they won't let you go on unless you read the terms of use. You

Paul Thurrott (01:53:49):
Actually have

Leo Laporte (01:53:49):
To read 'em. You wanna see how long the terms of use <laugh>. I bet it's page, maybe that's the whole game. Like, oh, this is how you get to sleep. You gotta, you gotta, I like this in Japanese. You, you gotta

Paul Thurrott (01:54:00):
Read 'em. How did they find a two point font that was that unreadable? And

Leo Laporte (01:54:02):
Now I have to read the privacy notice before I can agree to it. Wonder how long that is. Oh boy. Do they really think people are gonna read this? It is literally two point font. Yeah.

Paul Thurrott (01:54:14):

Leo Laporte (01:54:15):
And pages. Now I'm sleep. So that's the, that's the sleep. That's the sleep right there. Oh. I mean, they're making you lie basically before you could play this game. Wow. You have to lie. That's amazing. You have to say, I read this. Yeah. That's one of two. I don't know how many pages is there. It's still going, it's now it's in Chinese. Okay, great. It's language. It's every language. I guess. Even though I told it my language was English. So now I can do it. <Laugh>, you save data, including your track sleep sessions will be saved to our server. I agree to this. What

Paul Thurrott (01:54:50):
Is this data about your sleep going? Is this China? Is China taking

Leo Laporte (01:54:53):
This? It's yeah, this

Paul Thurrott (01:54:55):
Feels like China. We gotta

Leo Laporte (01:54:56):
Call Troy Hunt. But I read all But you have, you know, we won't let you unless you read the okay. Now I'm sleeping <laugh>. It's not a, now I'm sleeping. It's not a very active game. <Laugh>.

Paul Thurrott (01:55:08):
Alright. Do nothing. You win. You

Leo Laporte (01:55:10):
Did the list. Oh, wait a minute. Now. A 531 megabyte update will be downloaded. It's Oh, turns sports game out to sleep. You need a lot of data. A

Paul Thurrott (01:55:19):
Lot of data for sleeping.

Leo Laporte (01:55:20):
Alright. I'm sorry. No, that's okay. Just what a world we live in. What a world at least you're trying to promote goods, healthy sleep. You know what really top this off is mm-hmm. <Affirmative> is an Xbox segment. Really makes, yeah. Really make this

Paul Thurrott (01:55:36):
Go. So if you've been listening or watching to this podcast for a long time, you'll remember the, I call it the horrible era of the Xbox One, where Microsoft just couldn't make a dashboard that was performance. They just couldn't do it. They, it, it ran some of the most sophisticated three D game, three D games imaginable at the time. But navigating around this UI was horrible. And again, and again and again, they tried, they, they, they tried everything. They talked about how this was gonna fix this and that and that. And everyone complained it was never fast enough. And so finally they gave up and at the end of the cycle, they said, all right, this is what we're gonna do. They didn't say it this way, I'm paraphrasing because, you know, I, I can see what behind between the lines what happened there. But like, we're just gonna eliminate steps.

The way we're gonna make this thing work faster is you don't have to click on as many things. And so they just started making it more efficient. And and then the Xbox One I'm sorry. The Xbox Series X and S arrived and with the same dashboard, <laugh>, it was like interesting. And we've had been having the same problems. It doesn't get as much press these days, but again and again and again, Microsoft will experiment with or release a new version of what they call the, the home experience of the dashboard. And everyone's like, this thing's too slow. It doesn't work, blah, blah, blah. So that happened this year. They released something. Everyone hated it. They said it was too compact. Again, they were trying to get as much onscreen as possible so you didn't have to start scrolling and everything.

'cause That would betrayed the horrible performance of it. And so they backed off from that. They fixed some, they fixed that. They put some white space back in. And now today they've started rolling out a new dashboard, <laugh>. And it's supposed to be faster. It is. But we have reached that point that I described. They're literally, the way they're optimizing this is they're looking at ways they can reduce steps to get you from I don't know, turning it on to playing the game you wanna play. To me, this seems like an easy task. You know, we don't need to make, make it fast, we just to make sure you don't have to use it for very long. Yep. So anyway, that's happening. You can be excited or not about that. I'm, I'm losing my mind. <Laugh> most people although we've discussed it from time to time, have probably never heard of something called Google Play Games for pc.

Google announced this in late 2021, I think right around the time that Microsoft started talking about the Android app system. Sorry, the yeah, the app system, the windows subsystem for Android. Right? So one of the key parts of that original <laugh> announcement, just in case you thought these two guys were working together, <laugh> we are not using Microsoft's technology. This has nothing to do with this. So the beginning, we weren't really clear on what this was. Was it like an emulator? We it was like a game streaming services. Service may be based on Stadia. But by the time they released the first kind of early beta, it was only in certain countries at the time, it eventually expanded to many more, including now the United States. What we know now is that it, it is its own emulation layer.

The idea being that they'll curate games from the full play store, bring them down to run mtc. 'cause You know, they want you to be able to use the keyboard if it's, if it makes sense, or a game pad or whatever. You know, they, they want it, you know, not everyone has a touch piece screen PC or whatever. So, you know, they've been, they're doing kind of what Amazon does a little bit with their app store with Microsoft has done a little bit actually with game Pass ga titles that are streamed right over to the mobile devices using cloud streaming, our cloud gaming. And I, and we kinda land today and here we are. So now this thing, which is a month, you know still in beta two years later is available in over 120 different regions around the world, right?

That just doubled. It's accessible to more people because they've lowered the minimum system requirements for the pc. You need to run this thing which opened it up to hundreds of millions of additional computers. Granted, some of them, you know, the experience could be bad depending on the type of game you're playing. And there are hundreds of games. I don't know how many, I don't like counting games. I don't like when people do this to me. But this is where the disconnect happens for me, because I don't know any of these games. Like I, this is a different world. I actually feel like a lot of these, like, you know, that there are, there are different markets for games. Like in Japan, for example, there's a whole world of games that we only see a little chunk of here in the United States, and they're very different from the stuff we're used to.

It. It looks like that kind of stuff for me. I mean, there are games in there that, you know, everyone's heard of, of course. But I they list things like fi free Fire, max Cookie run, kingdom Eversol Summits, war Homes, scapes, Ebony, the King's Return Call of Dragons and Arc Knights. I Okay. <Laugh>. I mean, I realize I'm an old guy now, but seriously, I don't know what any of this stuff is. So, are, are any of these games good, I guess is the question? I don't know. I don't know. Yeah. So it's out there. You can check it out. If you have a Windows pc, I mean, I don't dunno, I don't know what to tell you, but that's, it's a thing. So yeah. There, there you go. And this is interesting only 'cause it's Blizzard, right? So Blizzard is part of Activision Blizzard, and if you are familiar with the kind of business models that are happening here, Microsoft, which is about to acquire this company, is trying to push a model in which games, although we'll see strategy wise, you know, which games right?

Can appear day and date when they're released to purchase through Xbox Game Pass subscriptions, right? And, or, or, and I guess Xbox Cloud Gaming, which is the streaming server. So Imagine Call of Duty, new version comes out, the acquisition has come out. Does Microsoft put Call of Duty on Game Pass? Do they make, do they let you stream it over the cloud? Right? if they do, will not, will not something bad happen revenue wise, right? Because Call of Duty every year is a blockbuster. I don't know how they're gonna handle this, but Activision, in their own world, one of the things that they did over time was move to a sit a situation where they self, they basically self distribute, right? They distribute all their own games Yeah. On Battle net. Yeah. Right. They're starting to step back from that possibly because the Microsoft thing, right.

You know, Microsoft's gonna do some different stuff. So Blizzard, which is part of Activision Blizzard, obviously is now bringing some of their key titles to Steam, which is one of the biggest and probably the biggest distribution point on pc. I guess maybe the web is probably technically the biggest, but whatever as far as these services that, you know, have game stores and yada yada, yada. It must be the biggest. So yeah, it's like, so we did battle that and now we're doing different stuff. And I think, you know, this is maybe a little preview of the Microsoft effect as I'll call it. Actually we should call it the Phil Spencer Effect. Hmm. Where this company's games will be more, more broadly available than was the strategy of this company when it was a standalone company. Right. Activision famously very much against Game Pass.

Richard Campbell (02:02:13):
So, well, we'll see. Not anymore. Welcome to the Club. You're in the club now.

Paul Thurrott (02:02:18):
Yeah, that's right. Yeah. So we'll see. I'm very curious. I mean, if Activision's catalog games, as I call them, are what constitutes Game Pass, I think that's fine. I think having legacy, like meaning one year old or older games on Yeah. Game pass on Steam.

Richard Campbell (02:02:35):
But I, I would, whatever. Yeah. Yeah. I I think part of this is have they made a deal so that it's still downloading from their servers? Like they still collect all the same data. It's just a different user interface over the top effectively.

Paul Thurrott (02:02:46):
Yeah. I don't know. I have no idea how Steam

Richard Campbell (02:02:48):
Works. I'm very much in the place where it's like I am, I seriously resist buying a game that isn't on Steam, because Steam is where I look for my games.

Leo Laporte (02:02:57):
Me too. Yeah, me too. That's, that's who I think it's me.

Paul Thurrott (02:03:02):
Yeah. I, I, the nice thing about the PC though is you can pick and choose, you know, so mm-hmm. <Affirmative>, if a game isn't on Steam, you don't lose anything by buying it from Epic or just the web, you know?

Richard Campbell (02:03:12):
No. It's just, you have to go look at the epic launcher to get to it. That's,

Paul Thurrott (02:03:15):
And that's why you should all be using the Xbox app on Windows. I'm glad. Thank you for allowing me to do this advertisement. <Laugh> it aggregates your games from all the different stories. Nobody uses it, but it is a

Leo Laporte (02:03:24):
Feature. Ironically, the Steam app really is horrible. I mean, it, it updates all the time. It's big, it loads in the background unless you explicitly tell it not to.

Richard Campbell (02:03:33):
Yeah. But

Leo Laporte (02:03:34):
It's convenient <laugh>.

Richard Campbell (02:03:36):
Yeah. And, and the only thing worse than the Steam library tool is everybody else's implementation of it. Yeah, exactly. Right. Yeah. It is the reference version that ev that Epic and Battlenet and all those guys try and copy and there's our worse. Yeah. Right. The only thing worse than any of those is everything EAs everybody. Yeah. It's

Paul Thurrott (02:03:53):
A copy of a copy's. This is, this is the quick burger story. It's like, we saw this terrible thing and we duplicated it, but we forgot some stuff, so it's even worse.

Richard Campbell (02:04:00):
Yeah. It's like you're on your fifth reordered pho photocopy and boy, it's just a blur now. Yeah.

Leo Laporte (02:04:08):
Okay. Alright. That was our double Xbox segment. 'cause Yes, two is better than one. Yes.

Richard Campbell (02:04:15):
So I see now with extra x <laugh>,

Leo Laporte (02:04:19):
Extra x just to,

Paul Thurrott (02:04:21):
Just to upset Elon. Sorry buddy.

Leo Laporte (02:04:23):
I, you know, the more I think about, the more I realize X is the least searchable. Mm-Hmm. <affirmative> the

Richard Campbell (02:04:29):
Least. Oh, yeah.

Leo Laporte (02:04:30):
Trade marketable name you could possibly come up with.

Richard Campbell (02:04:34):
Yeah. It's

Leo Laporte (02:04:35):
Totally, totally that runs in that category pretty well too. Yeah, that's

Paul Thurrott (02:04:40):
True. It's too bad. He, he, he could've used a lowercase I in front of the name and just changed it to I Twitter.

Leo Laporte (02:04:45):

Paul Thurrott (02:04:45):
X. That would've been better.

Leo Laporte (02:04:46):
I Twitter. Yeah. Yeah. All right. Little break. Little breath. Mm-Hmm. <affirmative>, the pause, the refreshes. Then it's the back of the book. Coming up next to the back of the book, we go with Paul RA's tip of the week. I, I want, I want to hear you say this out loud.

Paul Thurrott (02:05:04):
I know, I know you do. I'm gonna try to disappoint you. Oh, come

Leo Laporte (02:05:09):
On. Say it, say it.

Paul Thurrott (02:05:12):
The Jim's Hidden Gems. So <laugh>,

Leo Laporte (02:05:16):
What he's trying to say kids. So, okay. Is Clip Champ's Hidden Gems?

Paul Thurrott (02:05:21):
I'm turning into Clip Champ's biggest fan, and I'm, I gotta tell Youm comfortable. Oh, that's interesting. I'm

Leo Laporte (02:05:25):
Impressed by it too, man. It's a really great app. This is video editing app that Microsoft acquired and building Windows. That's by

Paul Thurrott (02:05:31):
The way, a web app. Okay. So here's the thing. Back in I don't know, January or something, I wrote an article about it and to figure out how good it was. I tried to emulate one of the videos I make for our YouTube channel, and it could do everything that I was doing in Adobe Premiere. So I was like, oh, that's kind of interesting. It does, you know, doesn't literally do everything, but I mean, seriously, it does way more than you might

Leo Laporte (02:05:53):
Think. Are you saying it's better than Windows movie maker?

Paul Thurrott (02:05:57):
<Laugh>. So it's been a, well, I mean, for the day, it's, it's in the same ballpark. It's in the same

Leo Laporte (02:06:02):
It's the same idea, right. Is a,

Paul Thurrott (02:06:04):
It's a surprisingly powerful and full featured application. Nice. So I think I discussed this. I I, I think I had this as the app pick a few weeks ago, because since we came here, I went, I had pro, there's something about Adobe Premier in certain hardware, just it won't render without glitching stuff all over the place. And I couldn't, I, none of the PCs I have here could render video, which I had spent hours making and, and Premier. And I'm like, I don't wanna waste time learning anoth, you know, but I'm like, okay, here we go. So I knew the two contenders were gonna be the baby toy clip Champ, and then something like Da Vinci Resolve. And I'm like, I'm gonna learn this thing. Screw it. And man, if you thought Adobe Premier was tough, welcome to the cockpit of a 7 47 da Vinci Resolve is horrific.

It's a lot. And I, I was, I was getting there, but I was like, man, I, I'm gonna, this trip's gonna be over. I need to make a video, but I just wanna get, this is not my job. I just, I don't care. I just wanna get this done. So I picked up Cliff Champ, and my God, this thing worked great. So, coincidentally to this, I'm trying to get the Windows 11 field guide flying, know, well, not fine, it's never gonna be done, but the content complete, you know, every chapter's in the book, et cetera. So one of the missing chapters from the digital media section was clip chat. So I'm like, you know what? I just spent a bunch of time learning this thing and actually didn't need a lot of time. I spent a lot of time using it and then discovering some of its ins and outs.

And so I decided I would write the chapter, which I did. So 50 pages long. It's a big chapter. It's the biggest, it might be the biggest chapter in the book. 'cause There's a lot going on, and I had to leave some stuff out. There's, there's just a lot of stuff in there. So I just wanted to discuss two of the things that I think are kind of unusual and almost AI and are not the top level features that anyone would talk about when it comes to this product or this kind of product, right? So, for example, one of the things you can do with this feature, this app, is record yourself with a camera. Obviously you could record the screen, like do a screen recording. Like if you're gonna demonstrate software, you could have a combination of those things with different views, screen and camera, right?

That's not a big deal. Or actually, I'm sorry, that is a big deal, but it's not unusual, right? We see that we have, we have tools for those things. This thing has a text to speech feature with multiple AI based voices. That sound incredible. That's nice. And if you, if, if you don't wanna narrate your own video, perhaps, or I'm sure there's other uses, you can instead write like I do, push the writing into this and then generate an audio file that sounds like a human being talking. Wow. It is amazing. It is amazing. You know,

Leo Laporte (02:08:33):
This is what, the reason this is better and different than MovieMaker is that we're in the TikTok era, and these are all TikTok features basically, right? Mm-Hmm. <affirmative>. Oh,

Paul Thurrott (02:08:43):
Okay. Alright. Fair enough. Yep. And very much TikTok interface. It sounds a lot. Yeah. I, I, I, I would argue as a 50 something year old that this use spans the tick generation to me, and that there are uses on my side of the fence as well, right? Like the one I just used. But yes, fair enough. That's, you can of course create nine by 16 videos and do all that stuff if you wanna make like phone videos. But I don't. I'm an adult. Alright, so what are the other ones? Is captions. So they have this notion, which is semi-related when you think about it, but kind of <crosstalk> goes

Leo Laporte (02:09:11):
Both ways.

Paul Thurrott (02:09:12):
Yeah, it goes both ways. So they have these effects and things you can add to videos like everyone else, right? So you can do audio fades and video fades. You can do all kinds of filters and effects, adjust colors, adjust the speed, the playback, speed, transitions color, et cetera. But one thing that applies globally, it doesn't matter. This applies, actually, I should say this does not apply to a, a clip in the timeline. It applies to the entire video that you're making is you can turn on auto captions. So I actually don't have it on in this computer, which is stupid, but I will turn it on here. You can actually filter for profanity and offensive language, but when you turn this thing on, it generates captions for your video, which you can edit as you're going through the edit process. So if you, if it mishears you or whatever, I took one of the videos that Stephanie and I made and I did an auto caption for it, and I corrected three things in the entire video.

Wow. And it creates an SS r t file. You can embed 'em directly in the video. You can do whatever you want. This is a really neat feature. And for this to work in a product that, by the way, is free, and by the way, is a web app, I want to emphasize, this to me is incredible. I, this app is more powerful than it needs to be, frankly, for something that's a, a bundle, you know, a free tie in or whatever, it's a free thing you get with Windows, you can pay for it when you pay for it. You get cloud storage through them. You get additional stock music sound effects and video music sound effects and, and images. I if I missed one but I don't need that stuff, right? So I don't, some people might it's reasonable now, if you do want that.

I think it's, it's under 10 bucks a month. It's seven or eight bucks a month, whatever it is. But I didn't even look at that stuff. I'm just looking at the free stuff. Like, I'm sorry, but this kind of functionality in a free web-based tool. Look, are you kidding me? You need to look, you should look at this app. I, I, I know the, the name is funny. We make fun of it. It's hard not to we are bullies. I don't know why we do this, but we do. I, but the more I look at this, the more I use it. And I've been using it nonstop now for the entire month. Well,

Leo Laporte (02:11:08):
And in the, and in the context of TikTok, clip Chop is a great name. <Laugh> Click Champ. Clip Champ. Clip Chop would be good. Clip.

Paul Thurrott (02:11:17):
I'm turning into a clip. Chomp.

Leo Laporte (02:11:18):
How about Clip Plop? Listen. Yeah. Clip Champ is a good name in TikTok.

Paul Thurrott (02:11:23):
Here it, listen, the pen name sounded stupid the first time we heard it. All I'm saying is this app is fantastic.

Leo Laporte (02:11:30):
Yeah. Wow. It's fantastic. Pauly. Yep. Pauly, you found your new friend.

Paul Thurrott (02:11:34):
I'm gonna, my, when I get Believer

Leo Laporte (02:11:35):
Get home, he's a believer.

Paul Thurrott (02:11:37):
I will be re I think next week, as soon as next week, probably next Thursday, I'll be recording new episodes of HandsOn windows. Good. And one of the first ones I will do will be a big, and it'll probably do longest

Leo Laporte (02:11:47):
Episode of Done do a series. Do a whole series.

Paul Thurrott (02:11:49):
Yeah. I, oh, that's interesting. Ooh. Maybe

Leo Laporte (02:11:51):
I will. Yeah, yeah, sure. A month worth a clip champ. What? That's fantastic. I I love it. Really good. I love it. Okay.

Paul Thurrott (02:12:00):
I knew I was gonna get a pushback on that, but it's good.

Leo Laporte (02:12:02):
No, I'm not giving you pushback.

Paul Thurrott (02:12:04):
No, no. I get

Leo Laporte (02:12:05):
Supporting you. I think this is a wonderful idea.

Paul Thurrott (02:12:08):
No, I'm <laugh>. I meant just mentioning clip show.

Leo Laporte (02:12:10):
Alright. Oh, that, yeah. Anyhow, <laugh>

Leo Laporte (02:12:14):
What are you a girl? I dunno,

Paul Thurrott (02:12:15):
What the hell are you thinking, <laugh>? What,

Leo Laporte (02:12:16):
What are you thinking? What do you wear

Paul Thurrott (02:12:17):
A dress when you use

Leo Laporte (02:12:18):
It? <Laugh>.

Leo Laporte (02:12:21):
What are you, Barbie?

Paul Thurrott (02:12:23):

Leo Laporte (02:12:23):
So you wear pink. I'm sorry. I was No, you're just the patriarchy Turkin. Just ignore it. Yeah, I don't get it. Just ignore it. How about, how about an app pick of the week, even though that really was, so if you

Paul Thurrott (02:12:36):
Use, if you use Windows and you do, you're here, right? Yeah. windows has a feature called Nearby Sharing that allows you to over Bluetooth or hopefully wifi share files from one computer to the other. I just mentioned the book writing process. One of the things I do is I use a, a certain computer that I have actually one here and at home, right? For this purpose for screenshots, same exact computer. And when I'm done, I go through the chat, you know, my, the writing computer. And I, when I have 'em all, I use nearby sharing to wirelessly transmit them to the computer I'm using for writing and editing, where I will edit those things, rename them, put them in the right folder, get 'em into the book. On Apple, they have something called who Cares What they have. But Apple is something obviously that Mo who

Leo Laporte (02:13:22):
Cares? Who cares?

Paul Thurrott (02:13:23):
Yeah. If you have iPhones and iPads and Macs, you can move files back and forth,

Leo Laporte (02:13:26):
Right? It's continuity. Yeah.

Paul Thurrott (02:13:28):
Kind of. Thanks. I didn't care. But now, thank you. I, I Childhood memory now gone because that, okay,

Richard Campbell (02:13:32):
So that's fine. Lost forever. <Laugh>.

Paul Thurrott (02:13:35):
So Google's ecosystem, they have a a nearby share feature which works between Android devices and Chromebooks of course. But now they have an app for Windows that brings it to Windows, which makes sense because, you know, windows, a lot of Android users use Windows. So they release this as a beta back in April. And now it is generally available and everyone can get it. They've made a couple of improvements. You know, the file transfer estimates are more accurate. You get image previews if that's what you're transferring the performance is better, et cetera, et cetera. I, I hate having to install an extra app. I, I wish to God that they had figured out a way, this is probably a Microsoft's fault, but it would've been really neat if they could have just integrated this with nearby sharing and Windows and just had it be like a integrated feature.

But I get, you know, whatever all kinds of reasons why they didn't do that. But if you have need a need to transfer files between your Android phone and Windows, this is available. It works well. I will say the most common time I need to do this is with photos. But what happens is I will, I take pictures. Like I'll take pictures of a device, like I'm gonna write a review, right? I, I put the phone down, I go to my computer, I go to photos i They're already there. They've already synced up. I select the ones I need, I download 'em. That works for me.

Richard Campbell (02:14:47):
Yeah. That's what I usually do.

Paul Thurrott (02:14:49):
Yeah. So that's my most common use case. So I don't really need this a lot. I, I can't say I've done performance benchmarking, but I my internet connection speeds here.

Richard Campbell (02:14:59):
I've, I've also been, you know, I, I'm busy collecting photos around the house for the handbook to, for somebody else to own my house. Same thing. Yep. And the big thing for me with nearby share is that as I'm taking the photos, I'm telling it, send this to my laptop. Oh, that's cool. Send this to the, but how I get back there. Oh, that's really cool. It's already there. I don't have that extra step.

Paul Thurrott (02:15:18):
Yeah, there you go. That's so you don't have to do

Leo Laporte (02:15:19):
It all at once. You can just say, send everything back.

Richard Campbell (02:15:22):
Yeah. Just keeps, that's

Leo Laporte (02:15:23):
A nice feature. I think. I like that. It's like tethering. That's what they call it in the professional photography studios.

Richard Campbell (02:15:32):
Tethering. Yeah. Yeah. Nice. That being said, I often take, you know, several photos. You already get a good one. And so it's useful to call.

Paul Thurrott (02:15:40):
You're, you're, but you're also Yeah. You're also transferring things that are garbage, but yeah. That's okay. That's

Richard Campbell (02:15:44):
Okay. That's what transferring for you bandwidth. You don't

Paul Thurrott (02:15:47):
Pay for it. Yeah, exactly. Yeah. I didn't get this bandwidth not to use it. Put garbage on it. Who?

Richard Campbell (02:15:51):
Caress <laugh>. Yeah. Especially bandwidth within my network. Right. Saturated with, I spent all this, this time building a perfect structured wifi environment here. By golly, I'm gonna try and fill it up. That's right.

Paul Thurrott (02:16:01):
I always, I always, I always use this for everything, but like, my favorite example of this is like, we were in Mexico City last year and my son's like, why is that? The cops are all blowing whistles. Like, they're all over the place. He's like, I why I, they're not even doing anything. Like, what are they blowing their whistles for? I'm like, mark, they didn't give him whistles not to use 'em. <Laugh>. I, I,

Richard Campbell (02:16:19):
That's that's what you know. Duh. If you had a whistle, you'd blow it. Yeah.

Paul Thurrott (02:16:24):
We're giving you this whistle. Use it. Use it.

Richard Campbell (02:16:26):
Yeah. Yeah.

Paul Thurrott (02:16:28):
And oh God, do they use it? Yeah.

Richard Campbell (02:16:31):
It's a thing.

Leo Laporte (02:16:33):
Latin America, it's all about the street sounds.

Paul Thurrott (02:16:36):
Yes. Yeah. Noise. It's

Richard Campbell (02:16:38):
All about the noise. And Friday afternoon riots. Yep.

Leo Laporte (02:16:40):
Or parades as

Paul Thurrott (02:16:42):
Are I always case. Well, no, they call them protests.

Richard Campbell (02:16:46):
Yeah. Yeah. The difference between the parade and the riot is just <laugh>. I always

Paul Thurrott (02:16:49):
Wish, like you, you guys know like Rick, Steves like guy who does Europe. Yeah. Like, I always wish Rick Steves would cover Mexico. 'cause I, I like walk around and just imitate him all the time. I'm like, the citizens of Mexico City are exercising there, democratic right. To protest <laugh>. You know, like, it's like,

Leo Laporte (02:17:03):
I actually,

Paul Thurrott (02:17:04):
But the other thing, I do the

Leo Laporte (02:17:05):
Same thing. I wanna be Rick Steves, when I grow up, when I'm walking around, I do the same thing I

Paul Thurrott (02:17:10):
Do. I, I walk, I'm like Boston is that cultural

Leo Laporte (02:17:13):
<Laugh> <laugh>. Turn on your Rick Steves and go. Yep. I think we should get a run as radio pick for this particular show here.

Richard Campbell (02:17:26):
Episode eight 90. This is one of the shows I recorded while at Build back a few months ago now. And the show is with Microsoft vp, Bob sir. Bob's an unusual VP in the sense that didn't grow with, he was hired out of Amazon. He worked on the Alexa skills kit for a long time. So always Envo involved with audio and, and audio interfaces and things like that. So he got pulled over into a c s or Azure Communication Services. This is sort of the overall ownership for voice video video text the underlying library that drove Skype that now drives teams. And he's ultimately responsible for the initiative to bring those capabilities into any piece of software. So they're building a lot. They have library tools and so forth. And our conversation was really driven on this idea of not having to shift context that you're working on a particular problem and you need help or you wanna ask questions.

And being able to do it from within the app, rather than having to go to a Slack or a Teams or your, the chat app du jour or making a separate call just to where you are. And then also having access to that app. So not so much to share the screen effect, but literally like share the particular chunk of data that that matters. It was a really fun conversation. Smart guy, you know, clearly been working in his space and has a broad viewpoint on it, having worked with different in different environments around it. Of course, we had to talk, we were built. So there was a couple of large language model conversations in there, you know run as is very CISA admin focused. So pretty quickly, I was on the, Hey, this is my tier one tech support. Like anything that reduces the number of tickets coming in to help. Is it help desk is a good thing. I would as a CISA admin want to encourage this kind of direction because it's gonna save me tickets in the long run.

Leo Laporte (02:19:19):
Run his radio eight, nine, oh, you have for some reason four brown liquors.

Richard Campbell (02:19:25):
Well, I really, a while ago I thought we, we, I thought I would talk about bottles. Ah, and, and I finally finished the writing on the bottle story and that's why I listed a few different whiskeys. So this isn't about what's in them. This is about the bottles that holds the whiskey. Well, and we've talked a bunch of times both in the, you know, Irish story and Scottish story and so forth about buying barrels. Right, right, right. And and when did bottling just become the mainstream thing? Because later there were laws passed that said you have to sell your booze in bottles as opposed to barrels be, and, and you know, why did that change? So, I mean, glass and glass bottles have been around for a long time. Archeologists have found evidence of, of, of bottle glass blowing in Mesopotamia from 1500 bcs.

So you're talking 3000 plus years of bottle making. It's only when you jump forward to like the 16 hundreds where, where glass starts to get cheaper through industrialization, coal fired plants and so forth. But glass used to be a relatively precious thing, and a glass bottle was a big deal, huh. Which really, you know, speaks to the hold decanter model. Like, have you ever thought, like the whiskey decanter is a sort of a classic thing, right? The, the, the, the cantor bottle with his matching set of glasses. And yet today, like why would you take the whiskey out of the bottle, put it into dec cantor? It's not like it needs to breathe. But that's not how whiskey was sold for the longest time. It was only available in barrels. And so because glass was so expensive and precious, you would, you would own a decanter and you would, or your servant would take the decanter down to the chemist <laugh> where, you know, I don't know what kind of 19th century Robert Baron you are.

Like, it's like whoever's we do this with kombucha. But so you would, you would own a barrel. You would rather go get your decanter filled by the barrel at, at the barrel and Oh, that's interesting. So whiskey was sold by the barrel. That's why you needed a decanter. Right? 'cause then yet that's what you'd have in, at your bar or at your service. Right. Substitute. You didn't want to have the barrel around. And this is because glass making is not a trivial process. It's hard to do. Right. And I, and it's been fun. You've seen this, the hand blowing of glass and how they make bottles and so forth. And it actually explains a lot of the odd things about bottles. If you think about how weird bottles actually are. You know that, that they use these long metal tubes and they pick up bits of melted silica from a kiln <laugh>.

And that's really the challenge of all of this is how you get enough heat to make glass reliably, 1500 degrees Celsius, like 2,500 or 2,400 Fahrenheit is what you need to really make enough heat to make glass well. And that's just not easy to do without a lot of technology. The terminology, because it's been around for, for hundreds of years, is hilarious. They use terms like the marver, which is this piece of metal or, or, or a piece of marble that you flatten the, the, the glass on. While it's still partly molten, that when you pick up the glass out of the, out of the furnace, it's called a gather. But the moment you actually put it on the Marr and put a little air into it, so it's got a little air bubble in it, well now it's a Paron. So now Richard,

Paul Thurrott (02:22:39):
You're turning into a glass nerd. And I gotta say,

Richard Campbell (02:22:43):
You gotta see these websites, man. Like there are people who are crazy about handmade bottles. Like it's a big thing. Right?

Paul Thurrott (02:22:50):
I kinda understand that. I mean, and it's really quite, if you go to Venice and take the boat out to Murano and watch 'em Oh yeah. Make the mur blast use handmade dungeons and Dragons dice. I know you mean. Yeah, but

Richard Campbell (02:23:02):
The question I wanted, I mean the general shape of a bottle makes sense, right? It's got enough room for the liquid, it's got a small neck on it to minimize air contact. That was largely for wine. Not as important for whiskey, but it was the punt that bugged me. Why is the bottle of the bottle got a dent in it? Like, what is that all about? And there's lots of stupid reasons why people think that a punt exists that way.

Paul Thurrott (02:23:23):
It looks like it's bigger than it really is. It's like, it's like the, the hole in a bowling ball so you can hold it.

Richard Campbell (02:23:27):
Yeah. Or it's a place to put the thumb to pour it. Not that anybody actually pours it that way. So here's the real reason. There's a punt <laugh> when you're blowing a glass bottle. So you sort of got it to shape now. And, and so you're, the blow rod is down the throat of the bottle, obviously, and you've been shaping the bottom to some degree. You need to make the neck and the end point of the bottle. You gotta get that rod out of there. And the bottle's too hot to handle. So an assistant now will take what's called a sorry. We will take a pon tail rod and pick up a little glass from the furnace and we'll stick it to the bottom of the bottle to hold it for you while you complete the knack. So now you're using a pair of tongs on a, what they call a chair, and you sort of shape it and you actually use a little bit of water with, with these tongs to make that part brittle. And you snap it off. And now the ponto rod is actually holding the bottle. And then as the bottle cools sufficiently, they can snap the ponto off and that'll leave a little mark on the bottom of the bottle. And so they push that ponto in shortened to punt so that it doesn't leave a sharp point on the bottom of the bottom, like,

Paul Thurrott (02:24:36):
Like the fontanelle on a skull <laugh> kind of a thing. Soft spot.

Richard Campbell (02:24:40):
Yeah. It started to be a little bit of an indent and it's just a place to leave the ponto mark behind on. And that's, you know, not a big deal. It's a logical thing for them to do. And then it just became the style after that. I'd also point out that especially with hand blown glass, making a flat bottom is almost impossible. And you want the bottle to not be tippy or slippy. And so they actually will push the punt in to make a rim around the bottom of the bottle, and then they'll roll that rim against a mark to make it sort of bumpy and serrated. So it has a little traction when it's sitting. It's much more stable to sit on a ring than it is to sit on a flat surface with a bit of traction on it. So the bottom of the bottle makes sense.

Punts were just created to make bottom bottle bottoms work better. And all those other explanations are wacky excuses. Hand-Blown bottles are just not practical. It takes a long time. It takes a lot of people. It was often used a ton of child labor just because, you know, that is part of the model. Mold formed bottles became popular in the late 18th, early 19th century. So by the 1870s or so, we're mostly forming with molds. And so same blowing process, you're still making a paron, which is a blob of molten glass with a bit of an air pocket in it. But then a kid is opening up a mold sitting on the ground. You stick the paraz on in it, it slams shut and locked. And then they blow hard to basically slam the glass up against the inside of the mold. To the point where, and I've seen video of this, there's literally like a bubble of glass that forms at the top as the blow pipe breaks away.

Give it, let it cool for 30 seconds, it's enough to take it out. And this is where you get all of those sort of classic bottles that have embedded letters and things on them or textures on them. 'cause They can put that into the mold. Ah, and it substantially improves the speed of making bottles. But and once you've made a bottle, by the way, it's quite fragile. Bottles break all of the time because they're under a lot of tension when they've been molded quickly like that. The normal cooling process for a mo a bottle, a blown bottle is about two days. You literally put it in a kiln with declining temperatures or it's very likely to shatter. And it's, wow. It releases the tension. It's called a kneeling. It's sort of wow. Eases the bottle. Today modern bottles are mostly soli are mostly silica sand.

They use a mixture of soda ash and limestones. These are all pretty common chemicals. Silicon dioxides sodium carbonates and calcium carbonates. Glass recycled because the glass baking process breaks so much glass. They got pretty good at recycling. It's called clet. But it, there's a big reason that glass is, continues to be recycled heavily. It takes less energy to remelt existing glass than it is to melt it from silica. So it's actually energy efficient to keep re recycling. Glass color glass is made with particular chemicals. The, you know, classic green glasses you use chromium dioxides. They're often contaminants that color glass, getting clear glass is really hard. But the real transformation of glass comes in 1903 from America, a fellow by the name of Michael Owens, who had been working on Edison making light bulbs at scale moved over to a bottle making company and the, and finally built a machine that took the manual blowing step out.

So he's still using molds, but the actual perzon was now made mechanically. So there was a big kiln. It, they would actually pour the, this, the liquid silicon from that separated into sections that were roughly paras on the side. And it would land into the mold. And then a mechanical blower would hit it, blow it out, and it would rotate. Then they move down a assembly line and the assembly line literally has flames coming out of it. So it's good hell looking stuff, but they're trying to keep the glass warm enough that it won't shatter until it can get to the, an kneeling furnace. Wow. And so they went from a team able to make three to 5,000 bottles a day to a machine that could do 50,000 bottles a day. Wow. And that's what drove the price of bottling down was suddenly it's over. Like that is so much cheaper to make bottles that way, that we just use bottles for everything. Huh.

Leo Laporte (02:28:51):
That's fascinating.

Richard Campbell (02:28:52):
And so, as is consistent with the stories that I tell on this show about whiskey, I then immediately go to the exceptions. 'cause The vast majority of whiskey, like 199.99% of bo are, are industrial made bottles. They use molds. You can see the seams on them. They have a little edge on them and so forth. That's just the nature of the way you make glass. Are there still hand-blown glass bottles for whiskey? And yes, there is. The problem is that it's the most exotic whiskey you can possibly imagine. And that's largely what I've listed here. <Laugh> things like the Shivas Royal Salute 62 Gun Salute, which is a what a whiskey blend made by the Shivas Company. The youngest thing in the bottle is 40 years old. That is, is this good

Leo Laporte (02:29:35):
Whiskey because it is a beautiful

Richard Campbell (02:29:37):
Bottle? Apparently it is. I've never tried it. <Laugh>. it's okay. It's a hand-blown bottle with a crystal stopper. And I mean I have my own

Leo Laporte (02:29:47):
Crystal stoppers, but that's fine.

Richard Campbell (02:29:49):
<Laugh>, when it was, when

Leo Laporte (02:29:49):
It was, the thing is, you can use this as it decanter after it's done. I mean, these are

Richard Campbell (02:29:53):
Beautiful bottles. Well, why did you throw these bottles away here? Gorgeous. Right, right. And so when it was first released, 2200 US a bottle eggs there, I've found a bottle on one of the whiskey exchange sites for 4,500 bucks.

Leo Laporte (02:30:05):

Richard Campbell (02:30:07):
That's the cheapest of this list until we get to something practical. So next up, the Glen Fiig 50, this one I have had I had a taste of it. So this is again, a hand-blown green glass bottle. This is a straight wit FIIG 50. So it's a space side trimmed in silver. The box is embossed leather. Is that

Leo Laporte (02:30:26):
Actual silver? Silver, silver.

Richard Campbell (02:30:28):
Actual silver. Silver. Because it's a $30,000 bowl.

Leo Laporte (02:30:33):
<Laugh>. Geez. Don't

Richard Campbell (02:30:37):
Where did you

Leo Laporte (02:30:37):
Taste this? Who had this to

Richard Campbell (02:30:39):
Taste? This was, this was at the Glen Levitt distillery when I was doing tour. Oh my goodness. And the ultimate manifestation of Rip Certy and Glass Blown would be Macallans Lilly Collection Macallans notorious for doing the most ridiculous, incredible, insane things. Lille is the best, one of the best crystal makers in the entire world. And so the Crystal Collection is six different types of bottles they've released over time. If you can get a look at the different bottles, they are unbelievably gorgeous. They are, the youngest version of this is a 50, they have a 55. There is a 72, which is exactly one of in the world. If you could find one and you cannot starting at a half a million dollars.

Leo Laporte (02:31:26):
Wow. What the, what?

Richard Campbell (02:31:29):
Just look at the bottle of bottle is beautiful. Right? Like, it's just, it's so silly.

Leo Laporte (02:31:34):
It's funny. So this is one of them. I'm when you first one of them the link. So

Richard Campbell (02:31:38):
You gotta go to the collection page and I'll go

Leo Laporte (02:31:39):
Back a page. There we go.

Richard Campbell (02:31:41):
There's your collection page. So there's the 50 Oh my, this is Lily Crystal. So I mean they've just, it's,

Paul Thurrott (02:31:47):
So when you say that, I hear the term Little League

Leo Laporte (02:31:50):
<Laugh>, but what is La Lale French maker Crystal? Yeah. Yeah,

Richard Campbell (02:31:56):

Leo Laporte (02:31:56):
Very famous. You surprised

Paul Thurrott (02:31:57):
I didn't know that. Right?

Leo Laporte (02:31:58):

Richard Campbell (02:31:59):
So I only list these to just show, this is typically where you find hand-blown glass. And now I'm gonna tell 'em when that isn't a hand-blown glass, but is when I think about a beautiful bottle, I

Leo Laporte (02:32:08):
Love this bottle. Yeah.

Richard Campbell (02:32:10):
Lans. It's one of the prettiest bottles in the business. Yeah.

Paul Thurrott (02:32:12):
People collect them. You get that. They give you like, like a, it's, it's, but, but you can go to Blanton's and they'll give you a strip from the barrel. Yep. And then they, there are holes for each of the stoppers.

Leo Laporte (02:32:22):
Oh, I didn't realize. They're different horses in each of the stop stoppers. They're

Richard Campbell (02:32:25):
Then they spell Blanton's and there are two different ends. 'cause There's two ends in Blanton. So make sure you get both ends, two ends of the horse. There's lots of people who talk about how the one is much harder to get than the other. It's not true. They're made in equal quantities. In fact, if you just want all eight stoppers, Blanton's will sell them to use for 80 bucks. So not a big deal.

Leo Laporte (02:32:46):
You turn into a, I have to see which one I have. Have, I didn't even know they was different. Yeah, it's

Paul Thurrott (02:32:50):
A fun, it's a

Leo Laporte (02:32:51):
Fun thing to, that's cute.

Richard Campbell (02:32:52):
So let me tell you, the stories of Blanton's is the story of Buffalo Trace. So the Buffalo Trace Distillery in Frankfurt is this massive distillery. It makes lots of different kinds of whiskey. Many you've heard of eh h Taylor, this eagle, rare part, wind, eagle, rare. They're all in there. Okay. Yeah. And so the supposed story of, of Blanton's is that the president of Buffalo Trace from the, in the twenties through to the fifties, which is a guy named Albert Bacon, Blanton <laugh>, because everybody needs the middle name Bacon. That's a good one. I like that. It's good. You, the, the main warehouse of Buffalo Trace, which they call w warehouse h is a all metal wreck house. This is very unusual, right? That the metal walls, metal roof, dirt floors and, and wooden racks. And this is where they age their ruff of trays, typically five to six years long long.

And that Blanton got in the habit of pulling prime barrels for his friends that he would find, he called them center barrels. So barrels that had the optimal aging experience because you have to think like Kentucky's quite a bit warmer than, than Northern Scotland especially. And so in a metal rick house, it's quite stressful. It gets very hot in the summertime. It gets very cold in the wintertime, relatively speaking, it's Kentucky. And so the barrels go through a lot. And so centered barrels that were a little more cushioned from the extremes had a, a better aging experience. And he keep it a little longer, sometimes seven, eight years. And then he would do a bottling from that barrel. That's the origin of Blanton's is from the guy named Blanton doing this private barreling. And they eventually made into product. It's one of the reasons that Blanton is so bloody hard to find right now is they are all single barrels.

They take a single barrel, they essentially bottle it as is the A B v's gonna vary. And they generally have an edition number on it, the actual style of bourbon. Because ba Buffalo TRAs makes a huge array of different bourbons. They have a set of mash bills that they call 'em the three mash bills. They're all kept secret. But the mash bill one is, you know, typical mash bill in, in bourbon is corn rye barley. Right? And so the real variation is how much rye. And so the mash bill one is a low rye mash bill believed to be less than 10% rye. And that's your buffalo trace, your eagle rares, your, each Taylors all come from mash bill one, mash bill two is considered a high rye mix. So 12 to 15% rye in there. And that's Blanton's and, and Elmer TT Lee also comes from that set. They do have a third mash bill, which is their wheated mash bill. So instead of rye about 12% wheat. And that is Weller and Pappy Van Winkle the fame. And I've not done a pappy one of these days. I will, yeah. Pappy's ridiculously famous for no good reason. I'm

Leo Laporte (02:35:37):
Glad to hear you say that because I've ordered it and it's expensive. It's hard to find. And it's

Richard Campbell (02:35:42):
Like, and it's no reason what's the big deal. But listen, the, the same mash bill is in Weller. So just borrow a bottle of Well, well, that's good to know. I would only say the difference is that Weller aged in a different warehouse from the Pappy warehouse. The pappy warehouse is made of stone and the weller warehouse is made of. I

Leo Laporte (02:35:56):
Expected to see God. And all I saw Pete whiskey is Paul

Richard Campbell (02:36:00):
Ott. Listen, I I see God every time I drink whiskey, it's a fine thing. Which whiskey doesn't matter. All

Leo Laporte (02:36:06):
Blanton's is not a bad whiskey.

Richard Campbell (02:36:07):
A lot

Paul Thurrott (02:36:08):
Of that is very good. Like eagle rare is very good. Blanton's is very good.

Richard Campbell (02:36:12):
Eagle rare special editions are exceptional. Yeah, they're regular. There's not, I got nothing bad to say about any of these. I like an eh h tailor, very drinkable. But the but the re and right now Blanton's because they stick with the cent, single barrel pr, single barrels. And by the way, that's not an, it's not an official term. Right. There's no licensing or f d a rules around what it means to be single barrels. So we're just assuming that Blandy still does this. Sure. it, it's one of the reasons it's just like hard to find normal retail on a bottle of bland is $65. If you can find one at the moment, they used to be readily available. It wasn't a big deal, but at the moment, chopped of mine, bud. Well, you

Paul Thurrott (02:36:50):
Can still, you tour and get it there <laugh>.

Richard Campbell (02:36:53):
Yeah, you can, you can always do that. There's always, the funny thing, and I found this with whiskey a lot of times is travel across the country a bunch. Small towns have it all the time. Big towns stuff. Yeah. Nice of all kinds of things. Best chance to find a Pappy little town of Kentucky. Sure. Right. A a a one bar town in Kentucky will have a bottle of Pappy, almost certainly. Interesting. Yeah.

Leo Laporte (02:37:13):
Kids, you're learning more and more day. And just remember drink Responsibly Mr. <Laugh>. Richard Campbell is run as and that's where you'll find T Net Rocks as well from beautiful Coquitlam, British Columbia, Canada. Thank you, Richard. It's great to see you be, see Paul Thaat, he's at Become a prime member. That way you'll get all the good stuff as well as the regular stuff, all the news and all Paul's great writing. And of course his book, the Field Guide to Windows 11 and the new one, windows everywhere. Both books We <laugh>, we're suggesting the title of the show should be, I Expected God, I got Paul Ott. I don't know, <laugh>, I dunno, I don't know. We'll think about it. I feel like, I mean, it was a good one, but it's vaguely sacrilegious. I'm not sure. <Laugh>.

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Thank you, Paul. Thank you, Richard. Thank you, sir. Have a great week. You're coming home next week, Paul, you're gonna be in Mexico? Yeah. and I'll be home next week. All right. Come back in October. Wow. The, the gaps are getting shorter and shorter and shorter. <Laugh>. I like the trips to get longer and longer and longer. So Yeah, I think so. Yeah. gives a question of where home is at some point. Yeah, exactly. Yeah. Yeah. And you're gonna be moving, you think next week you'll be in the in the beach house? No, this, this time. Next month. Next month, okay. Yeah, the big, the heavy move comes like the 22nd of August. And then from then on my, we're camping here. If anything, <laugh>, this is the beauty of this is, is you can be anywhere in the world and we could do this show. It doesn't really matter. It's just a question of where the rig lives. So yeah. Yeah, I'll keep, I'll keep enough rig here for a little while yet. But then, then we go to Copenhagen for two weeks. So we'll get a show. You'll get a show in Denmark and a show in the Netherlands. Can't wait. And I'll be back. I wish I could be with you. Have a little bit. It'll, then it'll be Oceanside Views after that. Delicious Danish beer. Thank you everybody. We will see you next time on Windows Weekly. Bye-Bye.

Mikah Sargent (02:42:32):
Hey, I know you're super busy, so I won't keep you long, but I wanted to tell you about a show here on the Twit Network called Tech News Weekly. You are a busy person and during your week, you may want to learn about all the tech news that's fit to, well say, not print here on twit, it's Tech News Weekly. Me, Mikah Sargent, my co-host Jason Howell. We talk to and about the people making and breaking the tech news. And we love the opportunity to get to share those stories with you and let the people who wrote them or broke them, share them as well. So I hope you check it out every Thursday right here on twit.

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