← Motley Fool Hidden Gems Investing
Loading summary
Transcript32 lines
- [00:05]
David Pogue
This thing seems to have gone under the mass media's radar. But Apple has turned into a medical instruments company in astonishing way. I mean, the watch can alert you about this huge number of life threatening diseases.
- [00:29]
Matt Grier
That was veteran tech journalist David Pogue, author of Apple the first 50 years. I'm motley fool producer Matt Grier. Pogue recently talked with Motley fool analyst Jason moser about those 50 years, about Apple's history, Steve Jobs, the imac, Tim Cook, and yes, about what the next chapter for Apple might look like. Enjoy.
- [00:53]
Jason Moser
David, thanks so much for being with us today. I'm excited to talk with you about your new book, the first 50 years and even talk beyond that to get your insights on the company, where it's been and where you think it may be going. So my first question for you, you know, I was looking at your website@davidpo.com for those of you interested. Go check it out. But one thing that really impressed me, it's the breadth of your library. I mean the topics that you cover, from Apple to opera and even digital photography, it was just, it reminds me of my father. You seem like you're a renaissance man, a lot of different interests. So what was it that inspired you to write Apple the first 50 years?
- [01:33]
David Pogue
I mean, it's a natural topic because I've been covering apple for, for 40 years. 40 of the 50 years. I wrote for, for Macworld magazine. I was a columnist there for, for 13 years. And then I became the tech columnist for the New York Times. Did that for 13 years covering Apple. And now I'm at CBS Sunday Morning also covering Apple and technology. So the whole thing was my wife's idea actually. She, she woke me up in the middle of one night, literally woke me up. She goes, david, David, wake up.
- [02:03]
Jason Moser
I have the best idea for a book.
- [02:05]
David Pogue
I'm like, what? She's like, Apple's first 50 years. And I literally shut her down. I'm like, dude, you missed it. That's come and gone. And then in the morning I looked it up and she was right. It was like two years away. Perfect time to research and write a book. But you know how when you have an idea in the middle of the night when you're half asleep, you're not really sure if it's a good idea. So I, I called my editor, Simon Schuster and laid this idea on her and she's like, oh yeah, do that.
- [02:35]
Jason Moser
Well, most of the best stuff in my life has happened because of my wife too. So I can certainly understand.
- [02:41]
Leesa Mattress Advertiser
Have you been sleeping on your Mattress a little too long like I have. My back's getting sore more than it used to and I feel like Homer Simpson with my body shape imprinting on the mattress. But like you, I'm busy with a job and kids and who wants to go to the mattress store with the family only to deal with a pushy salesperson? That's why I was excited to learn about Leesa and their premium mattresses that you can shop for from the comfort of your own home. We wanted stability and comfort, so we went with the Legend hybrid. It has over a thousand individually wrapped springs for extra support. But here's the great thing. It virtually eliminates motion transfer. Just in case one of us has a restless night. No matter how you sleep or your budget, Leesa has a mattress for you. They're made from premium materials right here in the US With a focus on using sustainable materials like recycled steel. Check out which mattress is right for you@leesa.com and for 20% off, plus get an extra $50 off with the promo code fool exclusive for our listeners. That's L EE E S a.com promo code fool for 20% off plus another $50 off. Support our show and let them know that we sent you after checkout Lisa.com promo code fool.
- [03:46]
Jason Moser
Okay, this is a bit of a wide reaching question, but after all is said and done, right, you've written this book. What's one thing that really stood out to you that you feel like people really need to know either about the company or about leadership? What's the one thing you took away that you', man, people really need to know this?
- [04:01]
David Pogue
I guess it's, you know, Apple's marketing is, you know, top notch. And they, you know, their whole story is we make the finest, we make the most beautiful, we really go the extra mile. And I always just thought, well, every company says that. Everybody says they strive for excellence, but man, when you peel back the curtain, Apple really does. I mean, the stories of the extra miles, they go, they're just like, I think my favorite one is, well, here I'll give you two quick examples. When they're developing the Apple watch, they've got these sensors on the back that can measure a very limited amount of stuff like your blood flow and your, the motion of your arm. But how do they translate that into things like your stages of sleep, which is up in your brain or your heart rate, atrial fibrillation and disease, and then hypertension, which is blood pressure. So to figure out how to correlate those data with your VO2, your blood oxygen saturation. They became the world's largest consumer of VO2 backpacks. So they bought all these oxygen measuring equipment backpacks with a face mask. And they set up fake apartments and they got people to live, workshop, dine play in these fake apartments wearing this equipment to measure their actual blood oxygen saturation so that they could train the AI how to correlate with what. So just like beyond and the other really great story is about face id, you know, unlocking the phone with your face. They wanted to make sure that it would work on every kind of face everywhere in the world. So they set up Makeup Mondays in the cafeteria at Apple where they would have prototypes and ask people to try to unlock the thing wearing special makeup, wearing wigs, wearing weird glasses. They would take the thing to Harley Davidson rallies on the premise that they would find a lot of creative facial hair there. And they did. They would take it to twins conferences to see if twins could fool. They hired Hollywood makeup special effects company to make these incredibly realistic 3D latex faces, masks with like actual eyes and whisker stubble. And, you know, the whole thing to make sure that you couldn't fool it with a mask. And there's like this great story of the guy in the mail room opening this box and there's like these decapitated heads looking back at him. But it's just, I mean, they go to ridiculous lengths.
- [06:45]
Jason Moser
Well, I think it shows in all of what they bring to the market. So it does. It sounds like a company that does its homework. You noted in the book that when Steve Jobs was, was with the company, he cut Apple's product line from 15 to just 4. Right, that quadrant strategy, I think it was. But from like inefficiency standpoint, how do you feel like that reductionist approach impacted the company's financial position during the turnaround? Because that's a big move. That's a big bet.
- [07:12]
David Pogue
It is. I mean, he shut down more than that. Yeah, they had 50 Macs, they had Pritters, they had the Newton, you know, the handheld computer. They had an advanced technology group. He shut all of it down. They had a low end series of computers called Performas that were terrible. So he and his hardware guy, John Rubenstein just said, we're shutting it all, all down. We're going from 70 products to 44. And to answer your question, Jobs argument was. And by the way, greatest turnaround in corporate history by a guy who'd never been to business school, did a semester of college. How did he know? How did he Know, I don't get it. But the cuts were not popular. Jobs return was not universally beloved. He'd run two companies in his life, Apple the first time around, and then next, the company he started after that, both failures. So, like, what confidence should they have that he was going to lead this company out of the doldrums? It was bad. In the 90s, Apple had all these fiefdoms, all these duplication. They had 22 different ad campaigns running. Jobs shut them all down, said, we're going to have one ad, and it was the here's to the crazy ones ad that was it. My favorite story is there was one point where two Apple lawyers showed up in trademark court to sue each other. It was so dysfunctional, the company anyway. So Jobs argument was by focusing on just four products, two laptops, two desktops, we can take our very top engineers and have them work on every aspect of these four. I mean, from a financial perspective, there's this unsung hero, the cfo, this guy Fred Anderson, who's very shy. He doesn't like the limelight, he doesn't really like to be hailed. But Apple was six weeks from bankruptcy when he was hired. Like it was on the edge. They had this run rate of like $50 million a week, and they had $400 million worth of loans to Japanese banks. And so Anderson did all this ingenious, instantaneous stuff. Like Apple was paying its vendors its part suppliers on net, 30 days. So they, they pay these parts suppliers within 30 days when the industry standard is 60 days. Like, Apple is being nicer than it needed to be. So he's like, okay, we're changing that. You know, we're going to stop paying dividends. We're going to fly to Japan and talk to those bankers and explain our plan for recovery and get them to extend our loans. Just a bunch of smart common sense thing. And that, that gave Jobs some breathing room for the financial stuff. And then for Jobs, it was radically cutting down the company's expenses by eliminating all these ridiculous overextended product lines and focusing on the four. And the first new one they came up with for that quadrant was the imac, which again, I just don't know how Jobs does it. Like, the imac was so weird, right? It has no straight edges, it's transparent, blue plastic. No floppy drive. First personal computer in history without a floppy. Like, what? What are you doing? Why, if your company is on the ropes, why do you bet everything on something that's so weird and radical and yet became the Best selling computer in the history of the world, you know, so Jobs, love him or hate him, man, he could see the future in a freakish way.
- [10:54]
Jason Moser
Yeah, very, very true. And what do you think is the biggest misconception about Steve Jobs?
- [11:00]
David Pogue
I have a good answer to that. So I interviewed this guy, Andy Hertzfeld, who was one of the original Macintosh engineers, and he said Jobs would burst into tears or he would burst into uproarious laughter. He could rip you to shreds, or he could put you on a pedestal. He was so many different things. And what Herzfeld says is any adjective you can use to describe a person you could have applied to him at different times. And so the misconception is everybody who thinks they know him, you know, everybody who says, oh, yeah, Jobs was an asshole, and yeah, he sometimes was. And, oh, yeah, Jobs was a godlike genius, and yeah, he sometimes was. But the totality is that he was all of these things and you could flick from one to the other, like, super fast.
- [11:55]
Jason Moser
Let's transition right here. You know, we move from Steve Jobs and we're going into the Tim Cook era. And you noted in the book that Steve Jobs told Tim Cook, and I quote, there has never been a professional transition at the CEO level in Apple. The last guy is always fired and then somebody new comes in. I want there to be a professional CEO transition. End quote. Now, how do you feel like this plan succession impacted the company's stability going forward? Because I remember vividly when Tim Cook over and all of us, we were like, oh, man, is this going to work? I mean, this is a big transition, but it seems like it was executed flawlessly.
- [12:33]
David Pogue
This is the mind blower, right? Like every critic, including me, like every headline was like, tim Cook is not the guy. He is not a product guy. He's not a showman. He is not colorful or passionate like Jobs. I mean, visibly passionate. Anyway, like Jobs, I mean, he could not be more different. Jobs was volatile and loud and dominated the room. Tim Cook is calm and shy, steely, but very reserved. The man does not raise his voice. He just doesn't.
- [13:08]
Jason Moser
No, I've never heard it.
- [13:10]
David Pogue
I know, exactly. And he was a logistics guy. He was the world's greatest logistics guy. Supply chain and prices and spreadsheets. But, I mean, he never would have thought of the ipod or whatever. And so I remember the Onion had a really mean headline like, cupertino Man Panics has no Ideas. That was article about Tim. But once again, as you say, this was the first time that Apple had Chosen a CEO not in a panic. They'd had five of them at that point. And yet somehow Jobs knew. How did he know he picked Simcook? How did he know that Cook was exactly the person for the next chapter? I mean, Cook has tripled and quadrupled the revenue, the profits and the headcount of Apple since. Unbelievable. And all this from a guy they said is not a product guy. I mean, it was a professional transition. And was Jobs lucky or did he really just somehow know that this polar opposite man was the right CEO?
- [14:21]
Jason Moser
It's crazy, but when you talk about the differences between Jobs and Cook, and I think you're absolutely right there. And so what's interesting to me, I think there's this big debate on Wall street with investors when it comes to innovation. I think that's probably one of the biggest criticisms from certain people today in regard to Apple is that they just aren't innovating. Right. And I think you got to sort of take that with a grain of salt because I mean, clearly they do innovate. It's one of the most innovative companies out there in my mind.
- [14:50]
David Pogue
But.
- [14:50]
Jason Moser
But it's also predominantly a phone company still today. But what do you say to people who say that Apple has lost its ability to innovate?
- [14:59]
David Pogue
Well, I think what they're saying is that they don't follow the Steve Jobs every three year pattern of releasing new world, busting new platforms. I mean iMac, iPod, iPad, iPhone, like every three years until jobs died. Right. And that does not go on anymore. It's not that they haven't tried. You know, there was the Vision Pro, which I mean that is really innovative. 5,000 patents on that thing. I mean 12 cameras and I mean the technology is absolutely breathtaking. I mean way too heavy and clunky and expensive. 3500 bucks. So clearly it failed. But they did innovate. And then there was the car. There's a chapter in this book about the Titan project. They were trying to design an electric, self driving, beautiful living room on wheels. This Titan car with chairs that faced each other and no steering wheel and the whole thing. I mean they invented so much in battery technology, screen technology. The sound system was said to be like nothing you ever heard. But it is true that they're not doing the cadence of every three years another brilliant hardware product. But there's an argument to be made that nobody does that anymore. That Jobs came along at an incredible time in history with miniaturization and cheap memory and Chinese manufacturing that made possible these amazing New categories. But Cook has innovated plenty in other ways. He took the company into software and, and services. You said Apple's a primarily a phone company. It's 50% a phone company. And the other 50% is these services. And, you know, then there's the Mac at 8%. So that was all Cook. And from, you know, from a profit standpoint, it's like hand over fist, right? Because there's no parts involved in offering services, but they're very popular. More Apple Music has more subscribers than Spotify.
- [17:05]
Claude AI Advertiser
As an investor, I know how easy it is to get lost deep in the woods doing research. Here's the thing. AI has absolutely supercharged my process, making me more productive and leading to better outcomes. But not all AI products are the same. Claude is the AI for minds that don't stop at good enough. It's the collaborator that actually understands your entire workflow and thinks with you. Whether you're debugging code at midnight or strategizing your next business move, Claude extends your thinking to tackle the problems that matter. It's not just a chatbot answering questions and telling me how great my questions are. Whether it's building interactive tools for data visualization without writing a single line of code, handling multiple complex tasks at once, and generating polished documents, spreadsheets, or apps. Claude delivers. And because accuracy is non negotiable, Claude's deep research feature can give me the insights that I want, providing proper citations so I know it's not hallucinating the data. Ready to tackle bigger problems? Get started with Claude today at Claude AI Fool. That's Claude AI fool. And check out Claude Pro, which includes access to all of the features mentioned in today's episode. Claude AI Fool.
- [18:06]
Jason Moser
I like that you mentioned in the book the Chain of Pain. This idea that Apple identifies broken consumer experiences, you know, like paying for things or organizing photos. Then they swoop in and they change it. What current industry today do you think Apple is most likely to disrupt next using that Chain of Pain playbook?
- [18:28]
David Pogue
I mean, this kind of steps right into the AI topic because what Apple demonstrated in 2024, which is this new AI driven Siri that has private guardrailed access to your messages and your email and your files. I mean, they had a woman come on stage and said, this is what it'll do. Siri, what time do I need to pick up my mom? That's all she said. And behind the scenes, in a tenth of a second, it went through her email, learned that her mom was going to come and visit for Thanksgiving, went Through her messages, found out her mom's flight number, went to FlightAware, looked up the flight to find out if there was a delay, looked at Google Maps to see how the traffic was, and then just said, you need to leave at 120. That is truly disruptive. I mean, AI is lousy in some ways. It still hallucinates, it still gets stuff wrong. But if Apple could do this, make Siri into our absolutely flawless, rock solid AI God of our own digital domains, data domains, that would be very disruptive. That's another chain of pain.
- [19:40]
Jason Moser
I'm glad you brought up AI because I'd like to wrap up today talking a little bit about, you know, the topic that's dominating the headlines day. Just AI, right? It's everyday AI, AI, AI. Now, one of the things we've noticed, you know, compared to the rest of big tech, you look at Apple's investments in AI, it's just comparatively very, very low. Like it's, it's almost nothing. Is this a case you think of them wanting to be best, not first? You know, Tim Cook says that a lot, right. We're not looking to be first, we just want to be the best. And that's worked out pretty well for him so far, by the way, but. Or do you think this is a sign that maybe they're not quite sure what to do?
- [20:17]
David Pogue
I mean, they definitely have a direction and they definitely know what they want to do. And by the way, I don't think they've got enough credit for the AI stuff, the generative AI stuff they put in so far. They looked at the awful parts of AI and they very cleverly avoided it. So, for example, their AI for your writing, it can rewrite what you've written, make it more formal or more casual, it can make it more concise, it can summarize, but it will not write for you. Because they don't want kids cheating with AI on their homework, which 50% of them now do. They don't like the idea of DeepFace using AI to generate pictures and videos of real people doing things and saying things that they never said. So they have this Image Playground app. It's generative art, but it's limited to cartoons, you know, sort of three dimensional cartoons. It doesn't try to make fake photos, you know, and I, I admire that in, in addition to the whole privacy thing, like they refuse to pass on your AI requests or the answers to anything that can be captured, studied or reused to train new large language models. But to your point, there's been A lot of news about the trouble Apple's had in AI. Like that demo of what time do I pick up my mom? That was almost two years ago. That's not here yet. They're saying soon. But they've now struck a deal with Google to use its Gemini AI to power all this stuff. And they've had turnover on the executive ranks. A lot of their guys have been poached. As you say, they've invested a lot less in all those Nvidia graphics cards. But having just written a book About Apple's first 50 years, I can tell you there was no time in Apple's history when there weren't people saying the company's lost its way. The company doesn't know what it's doing, the company's making a mistake. Like Phil Schiller, who is their head of marketing for a long time, said, if we're not getting flack for screwing up, then we're not innovating and being radical enough.
- [22:26]
Jason Moser
Okay, last question. I'm going to let you go. We talked a little bit about AI and you talked about Siri and some of the other opportunities. But based on what you know today, what do you think Apple's biggest opportunity in AI actually is?
- [22:40]
David Pogue
I think it's that idea of going beyond just ChatGPT style, chatbot generative stuff and nipping and tucking its way into every corner of the iPhone, the Mac, the ipod. In other words, it's not going to be a monolithic thing. They're just going to make every little feature better and smarter. The other part of it is this thing seems to have gone under the mass media's radar. But Apple has turned into a medical instruments company in an astonishing way. I mean, the watch can alert you about this huge number of life threatening diseases, giving you early warning of atrial fibrillation, which is the single most common heart rhythm ailment and gives 35% of those people strokes. And by the way, you can't test for atrial fibrillation in a doctor's office because it's intermittent. Right? You have to be wearing something all the time for it to pick up. So hypertension, high blood pressure can. Now they're predicting it'll diagnose a million people this year alone. Sleep apnea can become very dangerous. It picks up on that. It looks at your gait as you walk over time, looks for early detection of Parkinson's. And they're just getting started. They've spent a lot of investment on continuous glucose monitoring. And what's crazy is this is all on your wrist. Like what does it know about your stages of sleep that's up here in your brain? What does it know about the heart in your chest? It's on your wrist. It's mind blowing stuff. And now they're starting to look at the AirPods as a medical instrument too. They've just added heart rate monitoring in your ear and I mean, there's no telling where they could go with this stuff. I know that they have a lot of other really advanced medical projects going on with the watch and the AirPods, and AI plays a huge role in all that.
- [24:33]
Jason Moser
His new book, Apple the first 50 years is out now and you can get it wherever you get your books. Make sure to check out davidpohg.com, fascinating website. David Pogue, thank you so much again for your time today. This was a real pleasure.
- [24:46]
David Pogue
Thank you, Jason. Really appreciate it
- [24:51]
Matt Grier
as always. People on the program may have interest in stocks they talk about, and the Motley fool may have formal recommendations for or against. So don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes for the Motley fool money Team, I'm Mac Grier. Thanks for listening and we will see you tomorrow.