A (5:06)

And it's, it's a reach thing and it's also a depth thing, if you know what I'm saying. Like, yes, they have 700 million users who are using this, I think, on a weekly basis, ChatGPT. But I would say that this is also the first product that people have a deep relationship with. And not every single one, but many of them. You know, we are speaking on a week where there's two big stories, one in the New York Times and one in the Wall Street Journal, of people consulting these bots. One person before dying from suicide, that's the time story. And another one before doing a murder suicide, that's the Journal story. And in each one of these situations, it had become clear that ChatGPT was their closest confidant. And if you look at the backlash, personally, I've been upset that I've lost access to O3, but the thing that actually got people, that got OpenAI to move was the people that were upset that they have had lost their companion in 4o. And that is like the more you could say it's the bot with the more eq. So it's very interesting that, you know, what, what are the, what is the calculations or what are the calculations that a company like OpenAI needs to do before any sort of change? When you have people who have befriended, fallen in love with, or, you know, I don't know, even deeper, formed even deeper bonds with these models.

B (6:36)

Yeah. And, you know, it's obviously just a new, a new thing that, that all of us as, as end users are, you know, dealing with, as them, as a, as a company is dealing with, trying to figure out all the various layers to that. And, you know, I think it's going to take still a while for that to happen. But you're exactly right. Like that leads, that leads to a whole different level of these changes and how they impact. And I do think that they've talked about it enough and specifically Sam Altman has, you know, talked about a lot of this stuff enough and even Zuckerberg, you know, has mentioned like, oh, yeah, people, you know, are using it on a daily basis. Even, even meta AI to, you know, ask about their appearance, to ask what they should change and stuff. So it seems like, you know, they should have had some inkling that, that changing things around would have done that. I do think that they got maybe a little bit. And again, it's, you know, I'm speaking this from, from afar, from the outside, but it does feel like maybe they heard a lot of the feedback, you know, that many people have given, myself included, about that the model picker itself was getting way too convoluted and complicated. Right. From a, from a product perspective, you had the dropdown and there were dropdowns of dropdowns and dropped. It looked like Microsoft Office increasingly. Right. And so I think that they, they realize that that would be a problem Sam Altman had talked about previously, that they recognize that that was a problem. And so they probably weighed that more than the flip side of what we're talking about, where if they didn't give users a, the model, you know, they, I, I'm assuming that they thought that GPT5 was similar enough to 4o is as you're talking about that it wouldn't like people might not even realize like the difference. And there's an interesting question there of like if they didn't, you know, sort of showcase that it was GPT5 and they just switched it, would people have been that upset? Like probably certain people would have been, you know, realize that something was amiss. But would everyone have. I don't know the answer to that. But the fact that they rolled it out alongside this big, the model picker changes alongside the big model change, I think were two things that, that just didn't play well together. But at the end of the day, I do think that they were trying to simplify the product, which I do think they need to do to move beyond even that 700 million sort of user milestone that we're talking about if they want to be at, at meta level of a few billion users using this on a regular basis. I don't think that having a, you know, a model selector that's as granular as it was is going to cut it from a product perspective. But and I, you know, I talked about this before it rolled out. This was again, not that surprising for power users. You of course need to have some option and they thought that maybe they could get away with just like the, the highest level, the 200amonth. I think, you know, power users using it when really it needed to be the plus users too. The ones who are paying something like they needed to give them some sort of option.

A (9:27)

Right? And now, now here's where I start to wonder about whether we should view this as like a typical product rollout. Like if you think about the newsfeed, right, which is the thing that you referenced in your post, okay, the newsfeed was a brand new way to interact online where instead of like you having to go pull, I think your inner, you know, pull information from people's profiles, it just pushed it to you. That was definitely a big change. That was a shock. I remember. I'm pretty sure I formed like 10,000 people against the News Feed group and seeded that number pretty quickly. So we all hated it. But there was never any belief that social media was going to be AGI or this like all powerful, all knowing omniscient technology. It was just like, ah, this is just a thing where we post our pictures and now, you know, we're getting to see other people's pictures pushed to us because Facebook thinks it's important. That's one level of rollout. This, you know, this level of rollout was for years, years literally OpenAI was telling us, you know, that they were feeling the AGI and that GPT5 was again, like smarter than most humans at most things. And it was billed as we have now scaled these models to the point where you're going to notice like a definite improvement in the model. So I think that where the analogy to the newsfeed stretches a bit for me is is it that similar or is it more than that? Is it not only have you changed the user interface, but you've also failed to deliver on this promise that each evolution of your product was going to be more intelligent.

B (11:15)

Yeah, that's a good push because I do think that, you know, Altman didn't do himself any favors by going on Theo Vaughn's podcast, right, and saying that basically he was using the build of, of GPT5 and you know, it implying that it was getting very close, if not there to AGI already. Right. And, and doing things that were blowing his mind. And, and then when they release it, the fact that it wasn't, it wasn't apparent to most users, I think that it was that much above and beyond, you know, what, what had already been various models that OpenAI had, I do think plays into that to this as well and was different from what previously was the case with, with Facebook. I would just add one layer to the Facebook complexity back then, if I recall, was it wasn't just that the change was, you know, a Difference in ui. People were really concerned about the privacy angle even back then. Right. They were concerned that all of a sudden you could see, oh, that I liked Alex's photo because that was being surfaced in the thing. So it was like, in a way, it sort of pointed to all of the privacy concerns that, that Facebook and Meta would eventually have in a, you know, maybe culminating in the, in the Cambridge Analytica stuff and, and beyond. But in, in that way, there was real concern. It wasn't just like this trivial, you know, UI change that they did. There were concerns about it. Even though all of that stuff could have been seen before, it was the way it was, was surfaced to you. Right. In this new, this new distilled form. All that is to say, like, all these things, again, are different and have. Have nuance to them. It just reminded me of it at the highest level that, like, again, all of these things, when you make a change to a product that has hundreds of millions and, and going on towards a billion users, like, there's always going to be a massive backlash to it. And the fact that OpenAI didn't recognize that, especially with everything that you're talking about, all of the different layers with the human interactions, and the fact that they've been touting these, these models to no end is surprising.

A (13:17)

It could be that Sam Altman, whose experience was at Y Combinator, was sort of used to getting startups out to the stage where they would start to deal with these problems and then taking in a new batch. This is definitely. I mean, few people have grown a product from 0 to 700 million.

B (13:36)

And never this fast. Right, Right.

A (13:37)

Never this fast.

B (13:38)

The speed of it is too. Yeah.

A (13:39)

But you know what's interesting? Because if you look at who's inside OpenAI and the analogy you made, they should have been the first people that were aware of this because Kevin Wheel, who runs product there, used to run product at Instagram and Fiji. Simo, who is now the head of consumer products, ran the Facebook app, ran. And the news feed.

B (13:59)

Yeah, I'm not sure she was there.

A (14:01)

Not during that moment.

B (14:02)

She just started. But. But yes, totally, you're right. Gavin Wheel, for sure. And yeah, you almost wonder, like, you know, maybe they, they're. They're all smart people, right? And they're very, they're very competent people. Like, they have to. Someone obviously raised all this, you know, at various varying degrees, and they just had to make a judgment call, like, should we go forward with the bold move and just like, move alongside the rollout of, of the GPT5 model also go with this big UI change where we're going to simplify and, and a lot of people again been complaining about the granular drop downs. We're going to simplify and we're just going to, you know, pull the band aid off and sort of. This is the new way. Because, you know, there is like the history of tech too where you know, the whole dating back, of course to the probably apocryphal Henry Ford quote about the faster horses stuff. Right. But it's like basically you gotta at some level have the vision and put it in front of people. The Steve Jobs idea. Right. Like where we're going to show them what they want because they don't know necessarily. And turns out a lot of people did know what they wanted, it seems like with this product at least.

A (15:10)

Yeah. So do you think that GPT5 is a version of that? Do you think GPT5 is OpenAI putting out a model that we didn't fully, you know, having used it a little bit like we didn't fully know we needed it, but now that you've used it for a couple weeks now, it's apparent that OpenAI made the right decision because I'm still on the fence about that.

B (15:32)

Yeah. And yeah, I've listened to a bunch of your back and forths about it and it's funny how you and Ranjan have sort of swapped like thoughts, I guess about the way that these things are going. But from my perspective, so I'm not nearly. It sounds like as big of a.as o3user as you were. I was much more of a 4.0, I guess, user, so sort of more the default, you know, obviously for research and stuff, for doing different writings, I would use the, the reasoning models, but much more of 4.0. And so from that perspective, from 4.0 to 5, from my day, you know, stuff that I've been using, it doesn't seem all that much different to me. I do think it's slightly better in, in ways, but the tone stuff never was in my sort of repertoire and so I didn't really feel that as others who were, yeah. Engaging with it in the ways that we were talking about maybe did. And again and I wasn't using sort of O3, I guess to the level that you were and so I didn't notice it from that perspective. But it's clear, you know, they've made tweaks to it. Right. That they feel like those are legitimate complaints that they're getting from, from the user base and they, for whatever reason, I mean, misjudged some level of what GPT5 could offer.

A (16:43)

Do you think it's a good thing or a bad thing that people are becoming so attached to these chat bots?

B (16:49)

I mean, you and I have talked about this a few times already on previous episodes, but I, I mean I, I feel awkward sort of trying to judge the way people are using these. Right. Like, I do recognize that there are, there's a loneliness epidemic, you know, and people who have different needs in their lives at the same time. I'm reading the same things that you're talking about. All the headlines that are getting increasingly disturbing. Like I remember the one, I think it was a Wall Street Journal article from a few weeks ago where it was basically the, the elderly gentleman who was married sort of got sidetracked into this conversation with a bot and then ended up losing his life. Sad, tragically because he went out to go meet up with this bot who enticed him to come, to come meet with him. And I, and I think it was a, a meta bot, if I remember right. And so, you know, we're, we're having more and more of these situations pop up. You mentioned the two other headlines that are just this week. Right. And so it feels like we're only going to get more and more of this along these lines. And obviously I know anthropic and I think open AI too have all come out and said that they're going to do a lot more work to try to, to get ahead of this, you know, this, this rising problem. I don't know what the answer is though, and I don't know how on earth you, you sort of put that genie back in the bottle, for lack of a better phrase.

A (18:13)

Yeah, I think that's totally right. Obviously, like there's ways that these companies have to think about the safeguards that they just. Clearly they're finding the edge cases now and those edge cases are scary like the ones that you brought up. And they're just gonna have to figure out a way if it's possible to put the safeguards in because like in the case that I was talking about earlier of the teenager from California, this is the Time story who took his own life after speaking with ChatGPT. He got around all the safeguards and maybe there's only so much you can do as a company, but he told them that he wasn't thinking about suicide, he was writing about it and just completely ignored all of the, the continual pop ups that for him to go get help even though OpenAI was surfacing them, there are some great uses. I was reading this other story and I think we'll talk about it in depth on a future episode. But from rest of world, there's this stuffed animal that they are distributing in Korea. The government is distributing it and it is something that seniors can talk to and listen to. It asks, have you taken your medication? It looks for patterns. It distributes the insights to healthcare professionals. And in societies where you just don't have enough people to take care of the elderly, to keep them company, this, to me is very promising.

B (19:30)

Yeah, I saw that. I haven't read that article itself yet, but from what you're just describing, it reminds. There's a movie called, I think it's called Franken Robot. I don't know if you would have seen that, but it was an old technology movie. Not that old, probably 10 years old. But it sort of described this where it was like a robot companion for an, for an elderly man and, and sort of talking exactly to the points that we're now getting. And so maybe instead of her, now we all start to pivot towards, you know, another movie from the past that, that, that can sort of point to the future of what we're doing. But you're right, I mean, like, it's important, I do think, to point out, obviously, while we're pointing out all the, the, you know, the negative stories and rightfully so, that are happening right now, there are positives too. And, and there will continue to be positives. And I do think, like these companies are, are in a tricky, tricky spot trying to navigate this. Like, obviously that's also been the case in the past with, you know, what, what you were Google searching and things like that. Right. But this is like, to a level that we've never seen before and that will only presumably continue as we go down this path. Especially with things like where, you know, it's not just typing into a chat box, it's. It's talking and it's seeing visuals. Right. Microsoft has their. They're a little cute thing now that can like, you know, voice along. Yeah. Their new clippy that can move its mouth along with, with what it's saying to you. So all these things become like. And, and the new and gro. You know, very various.

A (21:02)

The love bots.

B (21:03)

Gotta love love bots.

A (21:04)

Or maybe you don't.

B (21:05)

All of that. Yeah, all of that is gonna. Yeah.

A (21:08)

Come into play. All right, let me, let me ask you a couple questions before we move on to the next part of this We've talked on the show about whether generative AI should be something that's like a thought partner, something that should be, you know, more action oriented or more of like a companion. Do you think it should be one of those three categories predominantly or should we just get a chance, you know, going back to our model picker question just to pick which one we want?

B (21:33)

Yeah, I mean, I wish I could give you like a definitive answer on that. I do think it's going to be different for every individual. I do think that, you know, I think one thing that will be sort of fascinating to watch over the next few years is if companies sort of go down, try to go down one of, one or more of those paths. I think we've talked about it a little bit, but obviously Microsoft, with what Mustafa Suleiman has said, he's been trying to sort of push it, push what they're doing with Copilot, which is still just an awful name for like their consumer facing thing. It's just way too conflating with every other AI thing that Microsoft is doing. But anyway, they're trying to go down more of the, you know, companion path and being more empathetic and doing all that stuff which is based off of obviously the work that he was doing with Inflection before it was acquired. Acquired by, by Microsoft. And so, you know, I do think that there are still people out there and still groups of thought that they, they will try to tailor a product around those specific use cases. I'm still skeptical that that's going to work that and that instead it will be sort of like these models that just are all encompassing and do the entire thing that people end up using. Maybe there's different front facing levels of that. Like maybe, you know, someone builds a service that uses the, you know, chat GPT backend or the OpenAI model backend to, you know, display things differently and, and sort of try to divert people into a specific use case. And obviously that's already happening to some degree with, with different services and apps that have come out. But I just don't think that all of this is going to go in, in one direction. I think it's going to be everything.

A (23:20)

Yeah, no, I'm with you. I think at the end of the day the model picker, we're going to end up just needing to pick. It's just going to be the case. We won't be able to escape it. But maybe it'll, it'll be three different options as opposed to like what you're.

B (23:32)

Talking about what it is now is. Right. It has like, you know, it basically is intuitive. I think if you, if, if, if someone was coming into the product ever having never used, and certainly there are. Right. There's got to be thousands, tens of thousands, maybe hundreds of thousands of people every week now who are coming in having never used the previous versions of it before. I would be, I'd be curious what that user research says. I would imagine that they think it's pretty intuitive now with, with just the sort of less granular model picker that they have. And it's right, so one version's faster, one's thinking, so it takes a little bit longer. And so I think that that's a pretty good in between that they, that they landed on, at least for now.

A (24:12)

Yeah, I agree. Okay, so let me ask you this. Did, did OpenAI break ChatGPT? That's the question I'm going to put. That's the title of the first title of the episode. Did OpenAI break ChatGPT? And in some cases I guess you could make the argument no. But I'm curious what you think, what's your bottom line on this one?

B (24:30)

Do you mean like, you mean, do I think that it's going to, this is the end, that it's going to go downhill from here, that they won't be able to sort of, you know, course correct. And they already have, right, they already have course corrected. And I've said in my article like this is this is gonna pass like this or I think already has passed. Honestly, like I do think that there's, there's still some level of backlash that you see out there, but it's not to the extent that it was when it, when it first rolled out, they quickly, to their credit again course corrected. They made some changes seemingly, you know, not even overnight like in real time that they needed to. And so yeah, did they break it for certain subset of, of the very intense user base, sure. But I think that, you know, time moves on, time marches on and they're going to continue to do this. I think they'll take learnings from what they did here. But the bigger question now is, you know, sort of what we were talking about. It's like I think they probably have to recognize and certainly Sam Altman does that they a little bit over promised, maybe a lot over promised and underdelivered here. That is, you know, that is 101 PR, 101 of what not to do. You know, especially now when we're making grandiose AGI and Super Intelligence and all the other flavors that we've been talking about. Claims like they have to know not to do that now. And so where do they go when they're still in this sort of both PR from a perspective, from an outward facing perspective of like trying to gain users but also employees. Right. And how do they, how do they manage that divide between both trying to be the hype man, but also trying to be realistic about what they're actually going to be able to roll out?

A (26:10)

To me, that's the core question about OpenAI over the next year at least is like, how does this company navigate the bed that it's made itself? Not to, you know, mash cliches together, but that's the problem for them.

B (26:22)

Yeah, yeah, I, I, I'm with you. I don't think that, I don't know how you navigate that and hopefully, you know, maybe getting the, the fresh set of eyes in, in terms of Fiji. Simu, who I know was on the board before, but her coming on maybe does help them navigate that a bit. Right. Because I know she's not overall CEO, at least not yet and, but she is taking on a lot of the responsibility and, and so Altman can focus on whatever the, and, and number of other projects that they're working on. And so if she is, has full reign to sort of do things a little bit differently, then I think that will be, I think that could be very important for them for the next year.

A (27:02)

Definitely. And of course they are locked into this recruiting battle with, with Meta on, you know, for talent and you know, of course Fiji's previous employer. Previous, previous employer and Kevin Wheels, you know, same thing maybe. So there's kind of interesting stuff that's also going on on that front. First of all, there was a report in Wired this week that three people from Meta Superintelligence have already left and two of them have gone to OpenAI. So that's kind of interesting how maybe there is this sort of boomerang effect and then also OpenAI is now doing open source and sort of taking that mantle from Meta potentially as Meta considers doing more closed sourced work. So you wrote a little bit about OpenAI's open source move. Does that give them a leg up now? Does it give them the talent to give them this opportunity to keep their lead? What happens on this front?

B (27:59)

So they've been talking about this for a while, right? Basically since Deep Seek happened, which you and I talked about way back when, several months ago at this point it sounded like that was sort of a wake up call within OpenAI and certainly with Sam Altman himself to say there might be something that we need to do to get out ahead of some of the open source models that are coming out. Obviously Meta had been doing that with Llama, but you know, there was still a lot of debate of like which way it would go. And so I think the deep seek moment, if there was any takeaway from that, you know, I do think that there were, there were takeaways in, in both sort of the showing chain of thought, things like that. But then also, yeah, with, with regard to what open source actually means and I think now with this move that they've actually done it, I think we're see various companies all coalesce around the same thing where it's basically, and this includes Meta, by the way, I believe if the reporting is accurate, and it seems like it is from every move that they're making that you see reported on a daily basis, they're probably not going to release, you know, their new versions of their flagship models as open source from day one, but they'll instead do it further down the line. And that's exactly what open AI just did. Google has been doing that. XAI just did this. Right. And so that's the new standard, it feels like now not going to be open source for the cutting edge. They'll say it's for security reasons and I'm sure there's legitimate things about that. But it's also just as much of a competitive dynamic for sure, I think, and famously right, like Deepseek used llama and maybe OpenAI to help distill down to, you know, what they were able to release. And so I think that that's the new dynamic at play and I do think we'll see Meta now, oddly, after being the open source champion, after Zuckerberg, all of his rhetoric around that, I do think that we'll see them probably go down the same path where it's like the next version of Llama, you know, the cutting edge version, they might have some other ones that are in the back burner that they roll out in between now and then, but whatever the next version is, they come out with, the new super Intelligence Lab stuff will probably be closed to begin with, but they'll promise like, oh yeah, we're going to release some open source stuff, don't worry about it, there's no change here. Waving their hands, you know, like pretending that nothing changed. But of course this is, this is changing and I do think that this is now the standard of, of how they're doing it.

A (30:22)

I liked your idea. Maybe if you get really attached to a model, once the companies open source it, you can just kind of download the weights and run it yourself.

B (30:30)

Yeah, why not? I mean like obviously there's some compute issues with that potentially, but as time goes on maybe, maybe it becomes feasible to actually do that.

A (30:39)

Yeah, that would be cool. All right, I want to take a break and then when we come back we have again three new iPhones that may be on the way. MG and I love talking Apple and so we are going to talk about what these phones mean for the company. Maybe it will distract everybody from the Apple intelligence failures and reinvigorate the iPhone product line. We'll talk about that right after this. Material Security is transforming how companies protect their most critical cloud assets like Google Workspace and Microsoft 365 with modern purpose built security that actually works the way people do. Most legacy tools were built for devices and networks. They were not built for the cloud. Material was built from the ground up for Google workspace and Microsoft 365. No retrofits, just cloud first protection that understands how your teams work. It delivers continuous security before, during and after an attack. You detect early, contain fast and recover with confidence. Lean security teams can scale through intelligent automation instead of adding headcount. Material also fits real workflows. Think layered defense for the cloud. Alarms, sprinklers and clear exits. It also flags risky settings, risky applications and suspicious password resets or verification attempts. Learn more and see how it works at Material. And we're back here on big technology podcast. We're here with MG Siegler of Spyglass. You can get spyglass@spyglass.org, it's one of my must reads. Definitely recommend you checking it out, signing up for the newsletter, visiting the site, all the above. All right, so on Spyglass MG you have an analysis of the three new phones that Apple is scheduled to release over the next three years. I'll just run them down. This is from Bloomberg. There's the iPhone air that's coming out in September. We expect that on September 9th to be announced next year. Again, according to Bloomberg, the iPhone fold or the code name is the v6.8. I think you say that it's obviously going to be called the iPhone fold. I think that's right. And then 2027, the curved glass iPhone 20. This is from Bloomberg. The design will finally break off the squared off. Break from the squared off slab we've lived with since 2020 and move to an approach with curved glass edges all around. It should fit nicely with the new liquid glass based interface for iOS and other operating systems due to be released next month. Core question here of course is the iPhone product line within Apple has been stagnant. There have been multiple quarters recently where actually iPhone sales declined. They're struggling because the phone is not really distinct one model to the next one. Maybe this is something that kicks that line into gear again and you could start to see growth in iPhone sales, the type that hasn't been there recently. So what's your perspective here?

B (33:38)

MG Yeah, I mean exactly that. I think that they are looking at the landscape. Obviously it's mature to the point where it's stagnant and in terms of sales and every, you know, you look at your, your current iPhone and it looks very similar to the one that you had five years ago. You know, when, when the iPhone 10 launched. That was sort of the last time they did a major, from a, you know, user facing perspective overhaul of, of the way things looked. And that obviously was a huge success for them when they did that. And so I think now it's interesting that as you note, they have these like three years in a row. And I, you know, I'm sure this wasn't purely coincidental, but it's interesting. Would they, would they have been better suited to sort of try to space them out a little bit more? Because at least in my own head now I was thinking through like the dilemma of like, well, I always know what iPhone I'm going to get every year because I always want to get sort of the fastest one. It's my most used device, right. I'm going to, I'm going to pay what it, what it costs to get the sort of the top of the line which is the, the pro model. And then I've now become accustomed to the big ones, the pro max as it were. But now with these newer models coming out, there's all sorts of different equations to be, to be brought in, right? So the air, you know, presumably coming this year as, you know, like that's a little bit different because it'll be thinner but it won't be the top of the line one is, is being rumored, right. And so like for me that, that sort of negates the need to get that, but it does, I think put the plant, the seed in people's heads of like, oh, is that good enough for me? Is that something that I would carry around? Do I want the less weight? Am I okay trading off a little Bit of battery life, if that is indeed going to be the case, which seems like it has to be given how thin it's, it's, you know, rumored to be. But also just the notion of new. Right? Like the oldest trick in the book in marketing and, and branding, right? Like I, I want an iPhone that looks new so people know that I have the newest one. This was a big issue for a long time in, in, in China, I think in particular, right where it was like people wanted to make it known that they had the, the flagship model, the top end, the highest end version because it was a prestige device. And I think that's the same thing is true in Western markets as well to some degree. And so I think people will buy the air, noting that, you know, it looks new and, and it's a talking point and you can show it off and whatnot. Next year is where things get really interesting with that fold. So I actually have, I have right here, which people can't see if we're just on audio, but I have the pixel fold right in front of me, the old one, not the new one that they just announced, which isn't out yet, but I, so I have it as a backup device. It's what I use for testing Android apps and whatnot and for testing some of Google's AI services that are, that are on the device. And I really like the form factor now the crease, you know, that people talk about a lot is an issue. It becomes more of an issue the more you open and fold it. And from all the reporting, again, that's presumably what Apple has been trying to figure out, how to alleviate that issue because it doesn't feel like a very Apple thing to have this giant sort of ugly crease in the middle of a device that you're using, but taking that away and if they can sort of fix that a little bit to the point where it's not as noticeable, I do think the form factor is great. And it sort of feels nice like in that it would be, you know, an iPhone that basically can also become in a way an iPad. And so they have a nice story there of how to do that. And if that is indeed like at flagship specs, like that's probably the device I get and I probably pay 2,000 plus, right. Or whatever it's going to cost to get that. And then finally the third year one that becomes interesting too because they're releasing a new overall design edge to edge, as you talk about glass and then it becomes like can if you, if you Bought the fold the previous year. And this is again something that was weighing in my head. Can you really go back to sort of having just one, the one screen again? And, and is the newness of it and the new design of it enough to tempt people over? The high level point though is that people finally have more than like one choice, more than just size choice basically and price point choice. Now there are a ton of price points and now there's all different sorts of form factor choices, which I think is interesting for Apple.

A (37:40)

Yeah, I would say, listening to you, the bottom line that I get out of this is that again, going back to my setup here, Apple has struggled, really struggled to grow these, to grow these. The iPhone line and getting these options is really going to help grow it. I think. There's no way we go through the next three years and we see iPhone sales flat.

B (38:07)

Yeah, yeah. And again, part of it is just new. Right. People will decide that, oh, the new thing is enticing them to, to upgrade their devices for the, for the first time in a few years. Right. That's the other thing. The other major thing at play here that, that sort of has only been alluded to in, in this discussion is the fact that a lot of these devices now are so fast that they're fast enough for most people to have for a few years. Like my wife's iPhone, I think it's three years old and she doesn't complain about how slow it is. I mean, you know, maybe if she used to compare to mine, she would notice a little bit. But they're really fast enough for the most part. And so you need other things to entice people to upgrade. And as we all know, famously last year Apple thought that perhaps AI would be that thing. Right. They only put Apple intelligence on the latest models that you could do it. And they were hoping, I think, that that's more people would, would be enticed to upgrade. But there was nothing, you know, enticing enough about Apple intelligence, I think, to get people to do that on a mass scale.

A (39:02)

Definitely. And you know, going model by model, I do think that the air is going to be kind of, I don't know, I still think it will lead to an uptick in sales because as you mentioned, new cells. But it's going to be a tough sell, I think, especially if, you know, people who are early adopters know that the new stuff is coming the next year and it's going to be tough to settle for something with low battery life and just one camera.

B (39:29)

Yeah. And it's interesting. It sounds like it's replacing the. The plus in the lineup. Right. And so like, the plus was the bigger of the regular, quote unquote, regular iPhone line. And so clearly Apple had the numbers to showcase that, you know, people just weren't buying that model relative to the other ones that were on the market. And so they're trying to slot this in there and seeing if that'll work. Now. They've done stuff like this in the past and it hasn't worked. Right. I recall, like, when they released, if you remember the iPhone, I think it was 5C, which was the color version where they did all these fun colors. And it was actually like a beautiful device in a lot of ways, but it just didn't resonate in the way that they thought it would. They marketed it all over. It was on all the billboards because it was so fun and colorful, you know, in some ways hearkening back to the old imac designs and things like that. But yeah, it just didn't sell in, in the ways that they had hoped. And so you wonder about that here. Obviously the Air, if they do go with that, is. Is the, the name of it that ties directly into the MacBook Air, which has long been their, their sort of, you know, very popular Mac device lineup to the point where they've changed the. The form factor, where it's like. Doesn't really even seem like the old Air anymore, but they still call it that because. And they had to bring it back, that name back. Right. Because it was, it was so popular. And so does that level lead to some level of like, brand affinity that people have with their MacBook Airs and they, they want the iPhone air and all those things come into play?

A (40:50)

Yeah. Can you talk a little bit more now, going to the fold, about why you like the fold? I've obviously seen it in use. It's funny because when I see people with folding phones, they always seem to be pretty happy about the fact that they can fold the screen out and watch something on it. Is it mostly a media consumption device or is there something else about the Fold that you like?

B (41:12)

I would say two things. One, media for sure, is one of the key use cases of it. The other thing, though, that I think is pretty interesting is multitasking, because you can. It's basically like having two phone screens side by side, you know, when it's unfolded. And so it's like two elongated iPhone screens. You would imagine sort of being there. And so just like you can on an iPad now, you know, you could run two separate applications and sort of, yeah, copy and paste between them more easily. And so I do think that that's like an interesting use case from a productivity perspective. Yeah. And the other stuff is media related and I do think that Apple will be smart and clever about how they do things like Facet, right. And things like that where I'm sure they'll have new versions of, of certain applications that can fully utilize and take advantage of that, that screen translation, things like that. Google's done stuff like that, right, where it's like you can put something on the table and see one side and the other person can see the other type stuff. And so it's, it's one of those things where I bought it on a whim just seeing like if it was a pure novelty. You know, Samsung has obviously been doing them for a while and it seemed like it was a novelty at first and they had all sorts of issues with those first models. But now it's gotten to the point where again I think it's pretty good and I think the fact that Apple again has the iPad as really the only successful at least in terms of like purpose built tablet with its own applications ecosystem on the market right now, I think that that will help them because again people are trained sort of on how to use an iPad and obviously they're trained on how to use an iPhone. And so if Apple is able to do this delicate dance well between those two and sort of meld those devices together, I think it could be pretty compelling. And there's a question of like, does that cannibalize? Certainly it seems like it would cannibalize some level of iPad mini sales because they would be similar ish in size. One doesn't fold I guess is the difference. That's true but otherwise yeah, I think, I think people will eventually get the swing of it. I do think though that price will be a big problem. Right. If it's really $2,000 we're talking about more than probably what your computer cost at that point. And so are people going to be willing to eat those costs? And can Apple do anything there with subsidy, carrier subsidies and whatnot to help offset?

A (43:33)

Yeah. And then finally when it comes to like wanting the new, I think this, the curved glass model, again just have a picture of what it looks like in my mind maybe like I'm kind of like picturing like the, the, this is stupid but like the, the mouse of the MacBook, like you know, just how it's.

B (43:51)

Yeah, I have one like this.

A (43:53)

Yeah. Something exactly like that. Right. Like maybe the phone looks like this, this MacBook mouse where it's like curved on all sides. It's gonna, if they pull it off, and I'm sure they will, it's just gonna look cool. The question is how often does it break? How often does the air break? I don't know but, but I think you really highlighted like the problem maybe, I don't know, the trade off that people are going to have to think about in their heads which is like do I want the fold, do I want this flagship one? How often does Apple update these phones? Do you go back and forth between them? A lot of questions that people are going to have but ultimately I think they'll probably just spend with Apple.

B (44:31)

Yes, that's for sure true. But you actually bring up an interesting point which I hadn't thought of that to that extent, which is that much like with, they've done with, obviously the Vision Pro in, in store might be more important than ever because if they are going to do these new form factors for the first time, people are going to want to see them. Like you don't buy, you certainly don't spend $2,000 to buy an iPhone. An iPhone fold, you know, again the, that's the, the name we're going with but who knows what they end up calling it. But the foldable iPhone, you, you don't buy it just out of hand, literally like right, like and, and not knowing having seen it before if a friend has it or something. Sure. But like you want to experience it first. So like you would imagine that the stores are pretty crucial then to moving those and having hands on time and demos of what you could do with it. Much again it hasn't really worked with the Vision Pro but much like they had to do with the Vision Pro to showcase how there's a difference. And Apple Watch back in the day, right. They had those, those setups to be able to do that. And so I think that that is, that will be an interesting critical component to that, to this level of having these new choices because right now you know that like oh, Apple released a new iPhone, I need a new iPhone. I know what it's going to be like because it's been the same for all these years. So it's like a no brainer purchase if you need one. But it's, that's not going to be the case necessarily with these new devices. The only other thing I would say on the flagship one, you know, the 20th anniversary rumored one is if they are actually able to sort of make it wall, you know, edge to edge screen and if they can get rid of sort of the dynamic island element of it and move all of that stuff sort of behind the screen and it becomes the real first, like edge to edge full screen iPhone, like that's, that sort of just feels like a culmination of what they've wanted clearly from day one. Right. Of the iPhone. And so I think that's a nice little bookend story of like this is the ultimate iPhone form factor as we originally set out in 2007 from day one. And you know, back then we didn't have the technology to do it and now we have the full. It's just a piece of glass in your hand.

A (46:31)

Yeah. All right, so I guess the big question here from this point is does this do enough to make people forget about Apple intelligence?

B (46:42)

I feel like that's a question that we're going to be answering for several years until they either fix it or don't. I think that it will make people forget about it as long as again, these things entice them to upgrade. I think that we just saw Google, you know, release the new Pixel phones, at least showcase them with that weird event with Jimmy Fallon which didn't seem like it went over that well. But you know, they, they obviously have a huge advantage in terms of AI. I'm not sure that they're taking full advantage of that though from the device perspective. Like, is there anything that was showcased that you absolutely need to buy a Pixel phone for to utilize and leverage Google, Google's AI advantage there. Not that I could, nothing that I jumps to mind in my head. There's things, there's translation, there's, there's lots of different features, but nothing that I think would, would sort of imply that this device is above and beyond an iPhone. And I do think that there's this other element which is lingering in the background which is, look, people still love, love the iPhone as a device. It's a super powerful device. The rumor is these new models are going to get more RAM than ever. And if and when that world ever collides with some of the more tailored for a device, AI models coming to the phones themselves, right, they're already, obviously Apple already runs some of the stuff locally, but when real, like real powerful models, AI models start to come and can be on device themselves and so you can run like, you know, you can do image generation in an instant, not like waiting for the cloud and not waiting for it to come back down. And things like That I think that that might become a compelling argument for Apple having just the pure best CPU and horsepower and RAM and device in your hand. That's all sort of guesstimates of like, you know, how that plays out right now. But I could see a world in which that becomes sort of more of an argument in Apple's favor at that point. It.

A (48:40)

That's right. And I mean, one thing that I always think about is the fact that ChatGPT, there's a ChatGPT app on my iPhone. So it's not like I need AI on my iPhone. But as this stuff gets more integrated, that's sort of where it becomes the issue. And now we have Apple looking at, you know, potentially integrating, even for even more companies, AI into their phone. You've written about this recently. They're now looking potentially at Google at anthropic. So it's, as you put it, a bake off between a bunch of different AI providers and then a bake off between Apple's technology and them. I think this is a good move. Try to find others and integrate it and see how it goes. And you could always swap it in the future if you want to.

B (49:25)

And that's interesting in what we were just talking about, right? So like Google just did this Pixel event. Rick Osterloh's up there on stage basically talking about like, without saying Apple. At one point Jimmy Fallon said Apple, which was very amusing. In the event. In the event, because that never happens. But Rick Osterloh certainly did it. But he alluded to the fact that they were maybe making promises that they couldn't deliver on in AI, right? Competitors were doing that, but Google was going to deliver on it, on some of this personal AI stuff that Apple couldn't deliver on. At the same time, if they are in fact talking about powering Siri. And to your point of like you have a ChatGPT app on your phone, we also all have, excuse me, a Gemini app on our phone. Right. And so a lot of this stuff is already available on the phone. So like, what is the actual selling point of Google's devices then? If everything is just going over and if again, in fact that they do end up, Google ends up powering at least an aspect of Siri. Like, and it's all the same AI technology powering all these things. Like it all just blends together and becomes like sort of a confusing ground for where what Google wants to hold back or what they don't want to hold back and that weird nature of it. But yes, in terms of The Bake off themselves, like, and what Apple's thinking here. So I actually wrote a thing two days ago, maybe it's even yesterday. I'm sort of blending together, but basically I'm starting to, to question the notion and you won't like this because I know you and I have talked about this and we were in agreement on this, but if they should make a giant acquisition in AI, I'm starting to second guess my thought there only because of things like this, like the Bake off. And it's like there was a good report in the information about, you know, how they've sort of not done a good job historically with some of their M and A. Their giant M and A that they've tried to do. Like everyone talks about Beats, of course, is the big one. That was the biggest one they've done to dated 3 billion doll deal. And you look at that and you think like, oh, okay, that was good. Like they bought that. And now they have all these Beats headphones and you see athletes wearing them everywhere. And it's good for the, for the hardware headphone business, I guess, which isn't a massive business, but, but it's good for them for their wearables and whatnot. But as it turns out, like the internal stuff of like, they thought that that might, the Beats software might be able to replace itunes and, and become the itunes in the cloud, but it sounds like, you know, they basically had to rewrite the thing and, and it just didn't work. And there were some culture classes internally. And so you think about this at the level of AI, if they make one of these not just 3 billion, say $30 billion deals. Right? And we've talked about it like, what's the culture like internally if they do that? And, and can these new people who come on board actually get stuff done with the ingrained people that have been at Apple forever? And so, you know, I'm really starting to wonder if they're not going to do that again. This report talks about how Eddie Q maybe has been pushing for them to do one of these with either perplexity or with Mistral. And there's just a bunch of pushback internally about it because of the, you know, obviously the historic problems that Apple has had with, with wanting to do their own things, but also just, yeah, some of the problems that they've had with M and A in the past. And so going back to your point about the Bake off, like, I think the Bake off thing is a much better way to at least get Somewhere in the early days of, of all this, right. Not having to spend $30 billion. The question is if one of the key parts of that Bake off story was that Apple maybe is balking at the price that I think it was anthropic is asking for and if they're asking for billions of dollars, like is Apple going to do that? Probably not.

A (52:56)

No. Yeah, no, it's totally right. I, I think that reading, I read that information story also this week about Apple's reluctance to do M and A. And I guess my question is, and I said this on CNBC this week, do you want to have a company that believes all great ideas come from within, or do you want to be a company that believes that there are good ideas that come from without? And if you're behind, the best way to operate your culture is to notice that quickly and you know, be create a culture where you can integrate those, you know, the people behind those ideas into your operation. And it's just not what Apple has today.

B (53:33)

Yes, and I agree like that. That is the key, and that's always been the key driver in my mind of why you do this deal. It's not necessarily to get a product though obviously a lot of has been made about perplexity in particular because of the search element. And if, and if, you know, the, any minute now, Google might be having to rule, you know, rule to break that deal with Apple, Apple. And so there was that element of it. But I'm less interested in, in how they integrate any of these individual products, like if Mr. Alls, you know, Chatbot and whatnot. I just, I, I don't think that that's what the path that they'll go down. It's more along the lines of it's interesting if it is able to change the culture to your point and give them like this new lease on life and able to refresh what, you know. Those executives at Apple have famously been there for 20, 30, 40 years and some, some cases and that's just, they're not obviously operating at the cadence as we've talked about before, that you need to operate in this age of AI and so that's why you bring the talent on board. But again, there's a lot of thought that that talent will just spin its wheels and do nothing inside of that culture. And so you spent $30 billion to do what? Exactly.

A (54:36)

Exactly. All right, a couple minutes left. You want to touch on Intel? US is taking a 10% stake in intel, turning some of the grants that they had. The country had made as part of the Chips act into, into stock. So what's your view here?

B (54:53)

You know these are, we're getting these, these strange interesting deals from the Trump administration. We got, we got you know, Nvidia giving cuts and AMD giving cuts of their sales. Now we got stakes in companies and, and you know, golden shares and other non tech companies and things like that. So it's all on the table and all these deals are being done. The intel one is fascinating obviously because intel has been struggling to put it lightly right in the face of TSMC and, and the age of AI and, and they were struggling because they miss mobile, yada yada. But they, they really you know, needed, they need something to change fundamentally and obviously they change their CEO but they need something to change about the business to actually make it work work and the US is incentivized to try to make that work. Right. For all the, the geopolitical reasons, you know, with, with TSMC and whatnot. And so the taking of the stake thing, the most interesting offshoot of that which only came out over the past couple of days which was sort of baked into one of the thing is that it clearly has been negotiated so that intel is not going to sell off their, their manufacturing business which has been talked about right that they would just outsource that and potentially to cut costs and get sort of intel, you know back in line and, and growing again. But it's clear that the, the U.S. government does not want them doing that. They view it as strategic. And now the real question is if with this investment and they're saying like it's not tied to necessarily any sort of strategic deals with other partners, but they need a partner, at least one and probably a few to use those foundry, the foundry capabilities that they have and so can they can the Trump administration Now with their 10% ownership stake would love to see that, that be worth more and more certainly. What if Apple comes in and says we'll use you know, their foundry to do a chip and it certainly would if Amazon comes in or if Microsoft comes in and you know they'll say it's all in the name, it's all in the name but diversification and we need to be able to you know, have, have, have multiple irons in the fire and, and chips being made in, in other places. But they have all of Apple's business as you know, right with the chip stuff has been in TSMC and it's been a symbiotic relationship. Right. And so, and, and same is true with a lot of those other companies. So if the Trump administration getting their ownership stake allows intel to cut some major deals to, to basically save the foundry and save themselves, like there's silver lining to it. But it's a weird deal. It's a weird situation and not a good precedent. And who knows the legality of it and how it's going to be litigated if and when Trump is no longer, you know, in charge of the country.

A (57:38)

Yeah, crazy times. I thought August was supposed to be the slow month of the year. Turns out we've just had, like, you know, I don't know, enough tech news over the past four weeks to fill at least six months. So I can't even wait for what September brings. And I'm looking forward to having a conversation again with you on the first Monday of October to break it all down, what's happened and what's coming. So, MG Great again to have you on the show. Thanks again for coming on.

B (58:05)

Thank you as always, Alex.

A (58:07)

All right, everybody, thank you so much for listening. On Wednesday, I will have the executive team of Precision Neuroscience to talk again about the science and the actual applications of the brain computer computer interface today in production and where it might be going next. Thanks again for listening and we'll see you next time on Big Technology Podcast.