← Windows Weekly (Audio)
Windows Weekly (Audio)
WW 969: The Hidden Sweatshop - Windows 11 Reaches 1 Billion Users!
Windows 11 Reaches 1 Billion Users!
Loading summary
Transcript508 lines
- [00:00]
Leo Laporte
It's time for Windows Weekly. Paul Thurat's here. Richard Campbell's here. Actually, Paul's in Mexico City. Richard's in Stockholm. We'll talk about what those Microsoft earnings mean. Also some new features in Windows 11 and one that Paul's just a little peeved about. And a very, very good month for Xbox. Or was it all of that? Coming up next on Windows Weekly. Podcasts you love from people you trust.
- [00:29]
Paul Thurrott
This is tw.
- [00:36]
Leo Laporte
This is Windows Weekly with Paul Thurat and Richard Campbell. Episode 969, recorded Wednesday, February 4, 2026. The Hidden Sweatshop. It's time for Windows Weekly, the show we cover all the news from Microsoft. Hello, you winners and you dozers too. May I introduce to you our hosts for today's program, for every program, Paul Thurat from thurat.com. he's in Mexico City protesting something. I like it that your posters on the wall are protest posters.
- [01:07]
Paul Thurrott
Oh, I see. I'm like, what are you talking about?
- [01:08]
Leo Laporte
You got a fist.
- [01:11]
Paul Thurrott
Yeah. There is a protest here every day about something.
- [01:13]
Leo Laporte
I know. If not a grievance parade, a celebration, a party.
- [01:18]
Paul Thurrott
Yeah, it's all the same thing. It's just nice.
- [01:20]
Leo Laporte
It's all the same. It's just marching in the street and playing music and celebrating. That's Richard Campbell. Today. Richard joins us from Stockholm. And you are there for.
- [01:32]
Richard Campbell
I'm here for Svitag, which is a. A Swedish conference. The two day show spoke both days, had a lot of fun. We're all done now. So I was out for an early dinner with some of the folks and then got back in time for this. Might make it to the bar tonight, maybe.
- [01:48]
Leo Laporte
It's late, isn't it?
- [01:50]
Richard Campbell
It's eight o', clock, so it's not too bad. But early flight tomorrow, but I, you know, got a comfy seat and a long flight, so obviously.
- [01:59]
Leo Laporte
Well, today we're gonna have some fun because you have a PowerPoint presentation for your whiskey segment.
- [02:05]
Richard Campbell
Well, you know, over on the weekend between London and here, I did sneak up to Scotland with my buddy David and so.
- [02:11]
Leo Laporte
Oh, nice.
- [02:11]
Richard Campbell
I toured two different distilleries, so we're gonna do the first one. We're doing the first one today.
- [02:17]
Leo Laporte
Oh, I can't wait. This is gonna be fun. Kids, if you love mash tuns, you're gonna love today's Windows.
- [02:24]
Richard Campbell
Wait till you see the line arms.
- [02:25]
Paul Thurrott
You'd be.
- [02:25]
Richard Campbell
I mean, talk about some line.
- [02:31]
Leo Laporte
You want to talk about linear. This is the show for you. This is a Special one as valuable and important as linear. Let's talk Windows first. We've got the deep analysis on the earnings learnings, I believe.
- [02:47]
Paul Thurrott
Yes, we're going to get there. But I was able to listen. Wait, is that true? Yeah, I was able to listen to the Microsoft Post earnings conference call last week. After the show, Satya Nadella does his kind of prepared remarks and just stepping through the whole business. At one point he says, oh, and by the way, we passed the 1 billion user milestone for Windows 11.
- [03:13]
Leo Laporte
Oh, that's big.
- [03:14]
Paul Thurrott
And he kind of kept going. Wow, that's an interesting thing for me because you may recall that with Windows 10, Terry Meyerson promised that they would get to a billion, I think he said devices, but we'll call it users in two to three years, I think was the timeframe. And then a year later they revealed in a really shifty way, but they did reveal that they were not going to hit that mark. And then they, of course they eventually hit 1 billion users, but it took, I want to say, four and a half years, ish, I think was the time frame. So not two to three years or a couple years or whatever it was that Terry had said. So Windows 11 has hit this milestone too. And, you know, this is the cynical viewpoint. Well, of course it did. You know, they forced everyone to upgrade, you know. Yeah, I mean, I guess so. You know, Windows 10 has been supported as long as any version of Windows in the history of the product. So it's. I don't really view them as jamming this down anyone's throats. In fact, if anything, that's what they did with Windows 10. Right. And the other thing about Windows 10 that's kind of interesting is this was the one Windows period. So they were counting phones, they were counting xboxes, they were counting Surface hubs, they were counting whatever, all kinds of things, not just PCs, trying to get to that 1 billion number. And you know, by the time we get to Windows 11, pretty much just PCs. So we're not really talking about those other devices and also we're talking about users, which is kind of interesting. So I thought that was kind of cool. But then I also thought to myself, wait a minute, Windows 11, when did this thing come out? It was like October 2021. It's a little over four years ago. So I did the math and actually Windows 11 got there faster than Windows 10. Wow. Despite the various, not by much, I mean, six months or less, but still fascinating in a way because of all the supposed hate about Windows 11, which you know, as I've argued many times, I don't think there's actually a lot of hate of this thing. I think most mainstream users of Windows don't even think about it. It's kind of ambivalence, really, if anything. I mean, obviously we live in an era where phones are a lot more important than computers as far as just enthusiasm and whatnot. And, you know, there are still Windows enthusiasts, but we're not the center of the world anymore. And yeah, you know, I think Windows 11 is fine. I mean, there's obviously some issues we're going to talk about that it's got.
- [05:43]
Richard Campbell
A new leader, which I think is great. Right. Like, it's been a while since we've sort of had a. Named head of Windows.
- [05:50]
Paul Thurrott
Yeah, right. Yeah, we did have that kind of weird period of time after Terry left. A couple of years. A couple of years plus where there was really no one directly responsible for Windows. There was no one representing Windows on the senior leadership team at Microsoft, which was a first, actually. Both those things are first. And yeah, I got weird there. But yeah, like you, I like the new guy. I like what I've seen so far. We're going to need to see some results. And I think we talked about this last week a little bit. But he's also in many ways constrained in the same way that Terry was, in the same way that anyone else in recent years has been, in the sense that Windows has to make sense within the broader Microsoft, et cetera, et cetera. You know, that's not always easy.
- [06:42]
Richard Campbell
Well, Windows used to wag Microsoft and now it doesn't. And so they've got to figure out how they live like that. And I think a new leader, and Van's not been that long with the company either, who really, maybe not really immersed in that old Windows lore, can come at this in a different way.
- [07:00]
Paul Thurrott
Right, right. Yeah. I think a big part of that stuff is just psychological. You know, when you're the part of the company that's running the world for so long and then you are only a part of that and then you're not really part of it anymore. Even though the business is solid, it.
- [07:16]
Richard Campbell
Makes lots of money, still billions of dollars.
- [07:18]
Paul Thurrott
Yeah. But it's obviously not the focus.
- [07:24]
Richard Campbell
The AI tweet rage. I hope it's. It seems like it's sunk in because he's definitely, you know, backed away a bit.
- [07:31]
Paul Thurrott
Well, we're going to talk about that because. Okay, I'm not. Yeah, I'm jumping the guy. Yeah, no, no, we talk about it right now, so. Because this goes right into that which is kind of out of the blue. Earlier this week, Pavan Davaluri was quoted as saying that we've heard the feedback from the community, passionate customers and Windows insiders, and we need to improve Windows in ways that are meaningful for people. And we're going to focus on some pain points this year which include such things as system performance, reliability and the overall experience. If you follow Apple, you may have heard a similar story, although no one from Apple has come out and said that explicitly. But the story, so this year for Apple, especially with iOS anyway, is focusing on some of the fundamentals, which I also take to mean cleaning up some of the mess of that liquid glass UI that they put whichever way I'm not everyone but a lot of people seem to actually not like, yeah, but.
- [08:30]
Richard Campbell
Most, most people I know haven't even noticed. And the ones, but generally the ones who have noticed are annoyed by it.
- [08:36]
Paul Thurrott
Okay, I don't mind it. I. There's some effects in there I think are kind of cool with the lock screen and so forth. But as far as day to day, like whatever, I, you know, I'm like, I'm never going to be the Apple guy, I don't really care. But, but it's. I'm amused to see that part of the world having issues in a way just because it takes a little of the heat off. Okay, but so this, this statement though, and why now and why, why, why did this happen? You know, I've been complaining about what we now call the in shittification of Windows for years and years and years. I can trace this back to the appearance of the first advertising in Windows and Windows 8, which at the time was relegated to the apps, those modern apps that it ship with, right? And you had a scroll, remember it was those panoramic things that you'd go left to right, not up down and you had to scroll and scroll and scroll at first to see them. And at the time I described this as a slippery slope. Just like the cops here in Mexico City that have whistles, right? We didn't give them the whistles so they don't blow them all the time. We didn't put ads in Windows so we could put fewer ads in the next version of Windows. This was like a trial balloon of sorts. And sure enough, Windows 10 for all of the high points and there's definitely some high points there, you know, introduce the most of the list of things that we would say is Windows today and certified or whatever started in Windows 10, right. And existed. Windows 10 through. And it's still there today. But okay, fine, but why? Why? Why, like, why would they. This was, this was tied to nothing. Like there was no reason to do this today. There's no real reason to do it at all. Maybe. Unless there's something, I don't know, meaning did some of Microsoft's biggest corporate customers, because let's face it, they're the only ones that matter, actually come to Window, you know, the Paban or whatever, and say, look, you guys could have fixed this or we're leaving, you know, which I don't think any of them are prepared to do. So I'm just a little unclear how this even happened. Separately from this, there was a report in Windows Central that Microsoft is having second thoughts about its AI strategy in Windows 11. And it's reviewing whether certain of those features make sense and we'll see what that comes out of that. I don't actually view those two things as being all that related, by the way. I know that sounds like from a high level they must be. I don't think so. And I wrote a very lengthier than I intended article about the kind of history of the insertification Windows and then this statement that pavan made and if you actually kind of step through it, because this is the type of stuff I do because my brain is so broken. But we're talking about three, four sentences here. What did he really say? Right. I find it interesting the way he describes where the feedback came from. Right. The feedback is this is a quote, a community of passionate customers and Windows insiders. It's not the full community. In other words, he's very specifically saying enthusiasts. Right. The types of people that might listen to Windows Weekly or go to my website or whatever. The people who overreacted to recall the people who freak out about all these things, they don't like Microsoft adding to Notepad or Paint or whatever it might be. The thing that is interesting to me about that, other than how obvious it is, is that I don't feel that that audience is super important anymore. That part of Windows not being the center of the world means that the people who might influence others using Windows are just not that important to the broader scheme of things at Microsoft like they might have been in the past. You know, that it was important to find someone who knew what they were doing, who could advise you clearly and you could trust. And I feel like those people today are more important on phone or tablet or something or, you know, AI or whatever it is. Like I Just don't. I don't even know what to say to that. So I just want to throw that part out there. He also says improving Windows in ways that are meaningful for people. Now the AI skeptics or doubters or haters or whatever they are are going to point that and say, see, see, see. That means AI. We're going to have less AI. And I'm like, I don't think that's what that means. In fact, AI is one of the ways that Microsoft can make Windows and individual Windows features more meaningful to people. When you think about it, if you think about those things that they've added to Notepad paint photos, you know, the Copilot plus PC features like click to do, et cetera, you know, if we just forget about the AI part of it because I know that makes people insane. But just as improvements to like the everyday use of these things, those are meaningful, actually. I mean.
- [13:34]
Richard Campbell
They'Re just productivity features. It's just that if you tag them with AI then you make people angry.
- [13:39]
Paul Thurrott
Right? So if I will throw a bond to Windows Central and tie these two things together in some tenuous way, it would be here. Because if you want to evaluate all of the AI features that Microsoft has added to Windows and kind of maybe grade them or. I think that my biggest criticism honestly is that so many of them are tied to specific computers, Copilot plus PC computers. And I feel like that creates an unnecessary verification of this market, which I think is terrible. We've seen some small examples of that reversing a little bit some Copilot plus PC features appearing elsewhere, et cetera. But if they are re evaluating how they're rolling out AI, to me that means more like, well, what do we do? What are we doing here? Why are we relegating things to certain types of computers? And that to me goes back to what I'll call our OG discussion about Copilot plus PC, which is, you know, Richard's saying, I don't understand why I can't get this on my GPU based desktop PC, which is an absolute fair point.
- [14:39]
Richard Campbell
And I told me I needed 40 tops. I brought you 1500 and you don't care.
- [14:44]
Paul Thurrott
Said, nope, you don't have the right 40. Yep, sorry. It's in the wrong place and that's stupid. Right? So look, we've been talking about that one for almost three years now, right? Is that right? Three, Is that possible?
- [14:54]
Leo Laporte
Three years?
- [14:55]
Paul Thurrott
Two years. Yeah, whatever it is.
- [14:57]
Richard Campbell
Well, you're two years.
- [14:58]
Paul Thurrott
Two years, okay, So I don't know that, to me is the issue. People like, oh, recall it's terrible, or this thing's terrible, whatever. That's not really the point. The problem to me is that those things aren't just everywhere and it should work with what you have. And so Copilot Plus PC computers are fantastic, but we're not going to get them out to 90% of the market in a year. This is something that happens over time. And I just, I have a strong visceral reaction to limiting the.
- [15:33]
Richard Campbell
You have so many other bets you have to make on a Copilot plus PC like Snapdragon, right?
- [15:37]
Paul Thurrott
Like, well, if you go on army, if you choose a Snapdragon one. Yeah, yeah, no, that's true. Yeah. I, I don't know. I feel like maybe Snapdragon and you know, Microsoft could see early on, like this thing was going to be amazing. And they also knew that we had several years of experience in the past that said, maybe this isn't going to be so great. People don't trust it anymore. And maybe that was part of the impetus for Copilot PC. Like hopefully deliver some set of a dozen awesome features that would cause someone to want to upgrade to that kind of computer, because it's only there. But I get that. I don't like it. I don't like it. I don't like it. And then his focus on what I'm going to call quality, which is interesting because today I'm just going to skip ahead for one quick second. Microsoft announced. It was very curious the way they did this, that they have two new. Well, I believe these are both new positions. Right. But it's what I clicked to the link to the wrong thing in the notes. I apologize. Let me just find the right story here. The guy who was previously in charge of basically cybersecurity at Microsoft, who was a 20, almost 25 year Amazon veteran before that, Charlie Bell has moved over to a new position. He, he likes, he's an engineer, so he wants to, he wants to be described as an engineer. His official title literally is Executive Vice president comma Engineer. It's like nice, but it's really engineering quality. Right? That's the, that's the job. They brought back a former Microsoft executive who had left to join Google, I think three or four years ago, was there for that three or four years and now is back and that woman, whose name is Hayet Galot, is going to be executive vice president of security. Both of these people are going to report directly to Satya Nadella as the.
- [17:37]
Richard Campbell
Engineering CEO Of Microsoft.
- [17:40]
Paul Thurrott
Yeah. Right. So I actually think no one said this. The word Windows does not appear in Satya Nadella's announcement email or whatever. But I think this might be tied to this Windows quality initiative here. Right. So when you think Back to like CrowdStrike and the Microsoft hack that no one's talking about anymore, remember Member state got inside their corporate network for two, three months, maybe longer we think now Microsoft never fully explained it. Microsoft had previous to that, announced the Secure Future initiative I think is the right sfi. Yep. And then this embarrassment happened back to back, both of them. And then they announced the Windows Resiliency initiative which by the way is a really good example of real world quality improvements to Windows through things like rust in the kernel, individual features like quick machine recovery, the evolution of smart app control, administrator protection, which will eventually show up in the product, whatever else, you know this, this work has actually kind of been ongoing in a way anyway and it driven in some ways by external events for sure. But you know this is the two halves of Windows. Right. And again this announcement of these people really wasn't about Windows but security and quality. Right. I mean when you think about Windows and if you get past the superfluous stuff, if you get past the UI complaints, past the AI complaints and you think about the past few years when Windows 11 launched, there were these hardware requirements that felt and were artificial. But as the security posture of Windows improves over the next couple of years and then we get to the Windows Resiliency initiative and all those features, those hardware requirements actually start making sense. And meaning Secure Boot and TPM 2.0, et cetera, et cetera, those are requirements for things like, you know, Windows, hello ess. Right. This the technology. And honestly it's not just technology, it's process as well that protects copilot plus PCs and other computers that enable this functionality. So it's interesting that he came out with this quote pavan and then Microsoft announced this within days. Yeah, these are.
- [20:02]
Richard Campbell
And I would have thought the roles are reversed because Charlie Bell was the guy who put together intra and sort of realigned identity at Microsoft and did a very good job. So I would have thought he would take in the security role, but I guess that's not would be really a promotion for him.
- [20:18]
Paul Thurrott
It would have been, yeah. There's no way to know, right. Nadella in his email and you know, we have to take it for what it's worth. We don't really know but he said he has been talking to Bell for a few years now. About this transition. So I think maybe they were writing for the. Waiting for the right person perhaps. I don't know. You know, the way these things come out to us. Like we. We put this.
- [20:40]
Richard Campbell
We see the end of these. Yeah.
- [20:42]
Paul Thurrott
Right. To us, this just happened. But yeah, the more.
- [20:45]
Richard Campbell
It's been long discussions.
- [20:47]
Paul Thurrott
Yeah. This is the case I made just a few minutes ago, but very briefly in much longer form in an article. But. And then I'll make here too with regards to this, like the. Yes, this happened today for us, but this has been in the works for a long time. And it didn't just happen like, oh, one day Wasatcher woke up and said, hey, I think we need better security. Do you know this person? By the way, there's a name, a guy named Alice. Alice, I guess A L E S. Holichek. He is now the chief architect for security and reporting to this new EVP of security. Interesting. Yeah. And he apparently did never encounter him. Yeah, me neither. So. But I guess he had a lot to do with a lot of this SFI and Windows resiliency stuff. So I bet he were. What's that guy? He probably David. Dave Weston's org. Some. Something like that.
- [21:40]
Richard Campbell
Yeah. Probably tied in there somewhere. I mean, the name is very Polish.
- [21:47]
Paul Thurrott
Yeah. I was gonna say it's. Yeah. Eastern European. Yeah.
- [21:51]
Richard Campbell
But definitely Eastern European.
- [21:52]
Paul Thurrott
It's missing one of those little upside down triangle thing. Whatever. But maybe I just didn't get it. I don't know. Yeah. So. But people.
- [22:02]
Richard Campbell
Yeah, he's from Prague.
- [22:03]
Paul Thurrott
Okay, There you go. There. Czech Republic. So like I said, I feel like these things are related, but you know, we'll see. Given this Pavan Davaluri quote, which again, like I said, kind of came out of nowhere. But I think there are things going on in the background there that maybe we don't know all of yet. I started to think first of all, like, what did he really say? So we went through that, you know, what has happened to get us to this point. We, you know, I think people understand what that looks like. I mean, this is all of that certification stuff that started in Windows 10 around things like forced telemetry, crapware built into the product, pre bundled advertising, everywhere. Windows as a service. Right. That remember Windows 10 was the first version of Windows that was going to be free for everybody. Meaning at that time Windows 7, Windows 8X, but also Windows Phone users. Right. But the little agreement you were making implicitly was you're going to let us, meaning Microsoft, update your computer all the time. And back then it was twice a year, major new version release of what we now call a feature update. Now it's down to one, but also monthly quality and security updates. Quality updates meaning basically new features in addition to, you know, bug fixes and so forth. That has gotten super aggressive. And so by the time we got to Windows 11, Microsoft said, hey, you know, we're going to back off, we're going to take our foot off the pedal. We're not going to. We know this is terrible, all these updates. We're only going to do one version update every year. Yay. But they've really escalated the monthly update thing. And that's all we talk about in the show. I mean, at the beginning of every show it's like, okay, what did they do this time? It's been kind of insane as I think everyone kind of understands.
- [23:50]
Richard Campbell
Yeah, yeah.
- [23:52]
Paul Thurrott
Windows 11 is curious to me. You know, like I said, we said this up top. I was talking about this notion that, you know, out in the Twitter sphere, it's like everyone hates Windows 11. It stinks. You know, Microsoft doesn't know what they're doing and it's like, yeah, it's not really like that. But you know, Windows 11, when it first came out was Windows 10 with a new UI. Right. And there was this notion back then and it was simpler and prettier, I guess, depending subjectively. Yeah.
- [24:18]
Richard Campbell
With a bunch of features hidden that.
- [24:20]
Paul Thurrott
People want a bunch of features just missing, you know. And I think that was one of the big pushbacks they got was there was a lot of functional regression there. You know, you, you could right click the taskbar in Windows 10 and get like 127 items in this pop up menu. Right. And when you did it in Windows 11 on day one, you had one item. It's a big change. And I don't remember that one was.
- [24:41]
Richard Campbell
A mistake they didn't want in the first place.
- [24:43]
Paul Thurrott
Exactly. So I don't know how many people remember this one, but if you want to take it back, the only version of Windows I can think of that was like that was on Phone. It was Windows Mobile 6.5. And back then the iPhone had come out. Microsoft needed to have a response to the iPhone. They had a multi year response that eventually turned into Windows Phone. But their first Slapdash Response was 6.5 and 6.5 was just Windows Mobile 6. But they changed two top level UIs, the lock screen and the home screen, to be touch friendly. Right. The kind of honeycomb look to it, remember? And there was some good innovation on the home screen back, the lock screen.
- [25:21]
Richard Campbell
I had that phone, by the way.
- [25:22]
Paul Thurrott
Yeah, there was some good stuff. But the problem was once you dove two feet below the surface, you got back to that old little stylus UI with the tiny little things that were hard to touch.
- [25:34]
Richard Campbell
You were back in CE land.
- [25:36]
Paul Thurrott
Yeah, exactly. So to me, that was what Windows 11 was like at first. It was like a pretty new face on the top, but it was just Windows 10. Which is part of the reason those hardware requirements are so offensive. Because if you had a PC that could run Windows 10 effectively, you had a PC that could run Windows 11 effectively, full stop. There was no reason at the time, it didn't seem like there was any good reason for them to artificially limit that. Now I would argue, actually TPM2, secure boot, et cetera. Actually, we do need those things and they are, some of those features are kind of core to some of the big security initiatives that have occurred in the years since the other little bit here. And because again, we focus, not we like us exactly, but everyone, this is very natural. You focus on those things. You can see, right? So you bring up the Start menu like, oh, it's a different Start menu. Or you bring up the widget, oh, look, the widget sports is prettier or something. It's like this is stuff you notice, right? But I think one thing slightly unfairly that Microsoft doesn't get a lot of credit for, which kind of makes this statement about focusing on quality a little bit strange to me because this work has been happening already for years now, but just side by side with the crap. It's like, how do you trust a company that is doing these untrustworthy things through intuitive, but is also doing these wonderful things? Mostly security, but not just security, but mostly security. It's almost like it's bipolar, right? We've got the good Microsoft, the bad Microsoft, the good Windows, bad Windows, however you want to say it. I'm not sure what to say, but in 24H2, remember, that was not what we call an EKB or an enabling package. This was a full stop blowout, brand new, where wiping the OS and reapply was a big thing.
- [27:25]
Richard Campbell
Argue it was Windows 12.
- [27:27]
Paul Thurrott
Yep. Yeah, right. I mean, at one point that probably, yes, there was a reason we were calling it that for a tiny amount of time. Right. Because it was going to be called that. Right. I think they eventually realized having three versions of Windows and Mark at the same time was very bad. And you know, yeah, that got pushed back. But.
- [27:43]
Richard Campbell
And while also Managing landing ARM as a full member of the suite.
- [27:48]
Paul Thurrott
Oh, yeah. I mean, right.
- [27:49]
Richard Campbell
A lot of movies in there, too.
- [27:50]
Paul Thurrott
Yeah, exactly. Yeah, right. Actually, that's a good point too. I, I, I didn't include a Windows 11 on ARM as part of this, but I should have because that itself represents a reliable new.
- [27:59]
Richard Campbell
They were doing a whole other release for 24H2 for ARM.
- [28:03]
Paul Thurrott
That's right, yep. So 24H2 was a blowout, big thing. The thing that made it not appear like that was that this was the time when they started doing the thing where they said, well, functionally, 23H2, 24H2 gonna be the same. And then when 25H2 comes around and says, yeah, no, that's gonna be the same too. And right now we're testing what's really going to be 26H1 and then 26H2 and it's like, yeah, it's going to be the same. Right. And there's some interesting dynamic behind that to me, because this was the, we want as many people as possible to be on the same Windows versions, the Terry Morrison thing. And this is a sly way to get there because you have businesses especially that are like, no, we're not upgrading until we absolutely have to, so we're going to stick on this older version. And Microsoft said, fine, we'll call it that. We're not going to change the name of the version, but you're going to get all the features that the newer versions have.
- [28:51]
Richard Campbell
We're just going to check different bits in that.
- [28:53]
Paul Thurrott
Yep. So it's kind of interesting, right? So 24H2, 23H2, the big divide there. Because you could have two PCs identical, other than one's 23 one's 24H2, functionally those things would be the same, but the 24H2 had changed dramatically under the covers, and Microsoft still has not fully documented what they did there. This is where they introduced a lot of compatibility problems, et cetera, et cetera. So we went through, you know, we went through some tough months there for sure, but they got over that hump, and now we're on 25H2, 26H1, et cetera. And I think that the, the hard underlying kind of technical work has been done and now we're just looking at, well, features, of course. But now apparently also what I'll call fit and finish, I think is maybe the way to look at it. You know, for me, I, I don't know where I would land on this stuff. If Windows 10, Windows 11 if the problems were forced telemetry, if the problems were what I would call kind of privacy related. Right, right. Things like they obfuscate what it may be or may not be sending to Microsoft and you have to go really look for the stuff it's hard to find or whatever crapware.
- [30:04]
Richard Campbell
And the constant pushing of OneDrive like did there's.
- [30:07]
Paul Thurrott
Well, no, no, yeah, that's actually. Sorry, let me. What I mean is if before you get to the OneDrive thing, because that happened a few years in, if it was just the stuff for Windows 10. Right. I'm not sure. Certification to me is a little bit of a strong word. Even things like forced Microsoft account usage, as long as you can get around it, which you can, you always could and you always can, still can. You know, to me that's defensible is a strong word, but I'll just say defensible to some degree. But the bad behaviors in Windows 11 that to me cross the line are things like this is the version of Windows where they took away the default apps interface that had been there for a decade or more before, where you could go into this interface and say, I always want this app to open these file types or these protocols or whatever it might be, or I want this thing to be the default app for whatever it is, viewing photos, browsing the web, etc. They got rid of it full stop. They just eliminated it. And this was the start of an effort to push Microsoft Edge on people. Right? And there's all that bad behavior around that. But the end result, because it was pushed back from customers and they changed a few things, and there is a default apps interface, even though it's kind of garbage, but it's gotten a little bit better over time, is that you could open up a new computer, set it up, download Chrome, because that's what you use, set it as the default browser. And everyone knows this. You click on a story in widgets, you click on a story in the search results and it opens in Edge anyway. All right. To me this is less than ideal. Also, Edge is always running in the background, even if you run Chrome, unless you do something to stop it. Also, if you misclicked or thought you were doing the right thing because Microsoft's using dark patterns, Microsoft Edge is quietly sucking in your Chrome configuration and pumping it into Edge so it has it too behind your back. You know, that kind of stuff. And then there's the thing. I was the original canary in this coal mine with OneDrive folder backup, forced usage, which would be comical if it wasn't so stupid or terrible, which is, you know, in the out of box experience. Windows setup, you should use Folder Backup. I do not want to. Are you sure? You really should use it as a second screen, just in case. Yeah, no, I'm sure. Thank you. And then you would get a pop up notification in the corner of the screen. You know, you should back up your stuff. You should use OneDrive. Yeah, yeah, yeah. I don't.
- [32:31]
Richard Campbell
Let me do it. I'm ready to go.
- [32:32]
Paul Thurrott
And then. Yeah. The next day you would wake up and it was backing everything up like you said. No. Multiple times.
- [32:39]
Leo Laporte
Money on one drive or something.
- [32:41]
Paul Thurrott
Yeah. Look, this is no one's fault, I'm going to say, but back in the day we had this. It was an indirect relationship, but it was a relationship where you buy a thing. In this case a computer running Windows. So you bought Windows. Technically the PC maker's on the hook. But you've got this Microsoft product. Microsoft made money from this and for X number of years use that computer and then a new version comes out. And back then for a long time you had to pay for that update and people would or wouldn't and they could make money on that. Or you would upgrade to a new computer and they would make money on that. Today Windows is free and they can't charge anyone. No one's ever going to pay for this thing as an individual. And you buy computers half as often as you used to because you're doing more in other devices. You don't need that computer as much. You're using it for very specific things.
- [33:29]
Leo Laporte
Well.
- [33:30]
Richard Campbell
And the returns on your hardware have gotten small.
- [33:33]
Paul Thurrott
Yep. So Microsoft understandably would like to monetize its users more. Right. Apple's doing this right now with this services thing. Right. They just announced, what's it called, Creative Studio. Right. Another way to stroke their best customers for more money every single month.
- [33:51]
Leo Laporte
Because this is infuriating me. They've gone all in on arpu.
- [33:55]
Paul Thurrott
Yep.
- [33:55]
Leo Laporte
It's all about service revenue now.
- [33:57]
Paul Thurrott
No, this is all this is. This is what happens when people who know spreadsheets work around the world, you know?
- [34:02]
Leo Laporte
Exactly.
- [34:03]
Paul Thurrott
And look, it's a business.
- [34:04]
Leo Laporte
Made up a name for it.
- [34:05]
Paul Thurrott
Yes, he did. Yeah. Was it Reverse Centaur? No, it was, yeah. So the thing, this is a tough one because on the one hand I do sort of respect the fact that Microsoft or Apple or whatever, it's a business. Right. They're trying to make money the growth. This is the whole way our economy works, et cetera, et cetera the world has changed. The old ways of making money don't work anymore or whatever, are not viable anymore, you know, and then they have decisions about how they're going to do this and they, you know, whatever. They made their decisions. I don't like most of it.
- [34:41]
Leo Laporte
You know why I choose an operating system designed by people who don't want to make any money and can't.
- [34:48]
Paul Thurrott
Okay, well, don't.
- [34:50]
Leo Laporte
Yeah, okay, but I mean, maybe that's another disincentive. There might be another problem there. I don't know.
- [34:55]
Paul Thurrott
I mean, you might wander off at some point, right? Well, yeah, and they will and they can. Right? That's the beauty of that. Once you've made that break, making the next break is easy. I mean, you could just go from the next distribution to the next.
- [35:08]
Leo Laporte
The guy who wrote Sudo Su d o or Sudo as some people call it, has been doing it for 30 years, kind of unthanked. Every single. Not only Linux operate, but wsl, everything uses it. He says, I'm kind of tired. Can somebody take this away from me? I don't want to do it anymore.
- [35:28]
Paul Thurrott
Yeah, this is the hidden sweatshop that is Open Source challenge.
- [35:34]
Leo Laporte
You do it because it's cool and.
- [35:35]
Paul Thurrott
Fun and people are using it and you're loving this, of course.
- [35:40]
Leo Laporte
But 30 years later, all of that fades.
- [35:44]
Paul Thurrott
Open source maintainer, my own job 30 years later and I'm like, yeah, no, I get it. It's like I don't feel like I'm making a difference anymore. There's no real.
- [35:54]
Leo Laporte
I have no problem with people getting paid for doing stuff.
- [35:57]
Paul Thurrott
Right. No, same. But if you want to tie this story to the original one, the first one is Microsoft. There are a billion users. They're not making any money from these people. There's some double digit millions of them who are paying for Microsoft 365 consumer. There are some who may be paying for what will become one of those tiers, but is basically OneDrive storage. There's some tiny percentage who pay for little things here and there. Like you can pay for Clipchamp or something or whatever little things they have, but they don't really have a big. They don't have an Apple Services business. Right? This does not exist. And part of the problem is because Windows is not the center of anyone's life. So we're not enthusiastic about it. We're not throwing money at the screen. Please, Microsoft, take my money. You know, that ship sailed 20, 25 years ago. It's just not in the world. So like I said I understand. They're like, we've got this untapped audience. How come we're not taking advantage of this? The problem is every time they try it's something terrible. I mean mostly or for the most part.
- [37:01]
Richard Campbell
And this is just. Are you now describing Pavan? Like I feel like he was, I wonder if he pitched the role to get the job. It wasn't sold to him. And he said hey, I'm just going to move us straight into the AI movement. Like he, he came in so optimistically having not really assess the state of the market and the market smacked him back and I hope he learned well.
- [37:23]
Paul Thurrott
Okay, so you bring up kind of an interesting point. The reaction to AI in many quarters has been viscerally negative. Microsoft is partially responsible for this. Right. I mean they pushed it so aggressively on everybody.
- [37:38]
Richard Campbell
Yeah. And still are.
- [37:39]
Paul Thurrott
Yes. And when you think about the advances that I'll say are in Windows that are AI related, I guess they fall into three buckets. There's the stuff that is free, right. You have a computer with Windows 11, you get some of these things for free. There's a paid upsell which today has morphed into a Microsoft 365 tier apparently or essentially like family or premium where you get. You the account holder gets access to additional functionality that is very similar to what people who have Microsoft 365 Copilot on the commercial side get. And then there are the people buy copilot plus PCs so they're buying a premium PC. Honestly I can't say that they're spending more on these things than they really spend on any good computer. But for lack of a better way to just phrase this simply, they're paying a little bit more to get this thing that has some stuff and it's pretty good. And it's relegated to those computers. And I'm going to go out in a limb. And with no data whatsoever suggested, I bet 80 plus percent of those people have no idea they're even buying such a computer. And if they do, they're not buying it for any one AI feature or whatever, but they are getting that stuff. So these are the three prongs of AI based value add that Microsoft can. Well two of the three where they can actually make money. The third, the one that's free is the one you're actually just. You just get it for using Windows. Yeah, you know, we get something at least. Is this going to change the world? I don't know. But in the sense a long way.
- [39:18]
Richard Campbell
For changing the world. We're just trying not to make people angry.
- [39:21]
Paul Thurrott
Yeah, there you go. Actually, that would be an improvement. Yeah, I mentioned that it was. Well, it was technically September of that year, but early October when I finally published this. Because I review so many computers, because I reset so many computers. You know, I review roughly 25 computers every year, but I also have between 30 and 50 computers that I work on and I'm resetting them all the time. In fact, I did a resetorama this week here in Mexico. I've. I'm going to talk about this a little bit later in the show, but I see things, you know, like I see dead people, except the things I see are dead. Technology are like. Are little weird changes. And part of the complication of my world, my life, is that Microsoft does not just release an update and everyone gets it. Right. This is that randomized rolling update. Yeah. The control feature release. Right. Which is not in any way controlled. It's completely random. So I could have 10 computers all in the same version of Windows, all updated, and they all have different matrixes of features. It's annoying.
- [40:28]
Richard Campbell
Yeah. And it's not just one ab, it's a set of ab.
- [40:31]
Paul Thurrott
Oh, no, it's whatever. If there were a hundred features floating out there. Do the math. How many possible permutations are there? So I see all.
- [40:39]
Richard Campbell
Yeah, 100 to the second.
- [40:41]
Paul Thurrott
So it's a million or 10,000. So it's a lot. And because of that and because of my nature. Right. We. Early in the show we're talking about how AI is like overly confident without knowing anything and. And I am sometimes underconfident, despite the fact that I'm pretty good about some of this stuff, you know, pretty. Yeah, So I don't. But I doubt myself. Right. And so what will happen is I'll see a change and. Oh, did I do something? You know, I can't really tell.
- [41:10]
Richard Campbell
It's just on me.
- [41:11]
Paul Thurrott
Yeah. Maybe it's something I did. I don't know. Maybe it's just the one up. Maybe. I don't know. So I have to. I have to be able to repeat things to make sure that it's what I think it is. And October 2020, I don't remember anymore. 23, whatever year it was, I started noticing what we now call this forced folder backup behavior, which, you know, then started happening very consistently and now happens. I still see it every day. Yeah, every day. And with that in mind, late December, I started seeing a new behavior in OneDrive that again, I doubted myself. This can't be, you know, because we've had these little times where, oh, they're going to fix something, or maybe it's going to be a little bit better. But it never seems to come together. And I've now figured it out as of like, literally this moment I spent, like I said, I just reset a rama this past week. And what I've been doing is resetting computers repeatedly, like in multiple computers. Like, I think eight of them. And I finally gotten to the point where I have it. Like, I actually see I got it. Like, I know exactly what's happening. I talked about a little bit of this last week. I just recorded an episode of Hands on Windows that will be is weeks away from being published. But one of the two behaviors is Microsoft has forced folder back upon you after you said no. Or part of the new behavior is it actually doesn't even suggest it anymore. It just doesn't say anything and it just turns it on for you. It's unbelievable, but it turns it on. Okay, look, if you want it, fine, you can skip to the end of the show. It doesn't matter. But if you don't want it, like, I don't want it, you can go back and you can turn it off, right? And we've been able to do that all along. But when you do that, it leaves the files that it moved where they were, meaning in OneDrive. So if you had a desktop full of full files, if you had a documents folder full of files, pictures, which could have all of your photos, by the way, or your screenshots or whatever you're doing, if you turned off folder backup, A, the good news is it will never bother you again. That's never happened. So I've noticed that over years. That's good. But B, those files are gone. And for a lot of people, average users, they might be like, you deleted my files, where are my files? Or, you know, or what's going on, they'd be confusing, right? So one of the new behaviors is it actually asks you, what do you want to do with these things? All right, so we're going to put it back the way it was. But do you want to leave the files where we put them in OneDrive or do you want to put them back where you had them locally in a folder on your hard drive? And that's good, right? That's a step forward. The problem is it's already commingled your local files with whatever was in the cloud. And so if you choose to put them back on the computer, you're also Moving everything that's in there. So if you had a bunch of stuff in OneDrive, you could have a problem, right?
- [43:54]
Richard Campbell
Yeah. You could run your thing out of this space.
- [43:56]
Paul Thurrott
Yep. And yes, and I've seen that error, so that's fine. And I think I did a. Yeah, I did a demo of what that looks like for a hands on Windows. So that's maybe three, four weeks away.
- [44:05]
Richard Campbell
But let me ask you a question. When you rebuilt the same machine several times, iteratively, knowing you were going to get different feature sets each time, did the same machine always come up with the same set of features or is each time you build it, the features changed?
- [44:19]
Paul Thurrott
Yep. So you're ruining the end of the show. But let me.
- [44:22]
Richard Campbell
I'm sorry.
- [44:22]
Paul Thurrott
No, no, no. You're so smart, you actually got right to the heart of the matter. No, I. So let me describe the other behavior that's new, and then I'll explain what I mean by what I just said. The other thing, and this was the more elusive one, is you bring up a new computer and you're at the desktop and it's doing stuff in the background. Right. So the OneDrive icon appears down in the tray and click it, go to Settings, open Settings, and you go into the Manage Backup interface, which is that thing where you get the five folders or up to five folders and three of which would be the ones that are enabled by default. You know, if you do it right away under certain circumstances. There's a little yellow info bar in there and it says getting things ready for backup. So it's not yet start done, it's not yet made the change. This is brand new. This was never there before. And there's a cancel link. If you click cancel, if you see this thing and you click cancel, it will not enable photo or OneDrive folder backup.
- [45:29]
Richard Campbell
Wow.
- [45:30]
Paul Thurrott
Like that actually stops it, I think. I mean, I'm working on only weeks of experience, but across multiple machines, that's been my experience so far. The problem I've had, the question is.
- [45:39]
Richard Campbell
How does it market? Do you think it drops a registry entry that moment? And can we find that entrance so you could just create it yourself?
- [45:45]
Paul Thurrott
I know I want to know this so bad. There's a lot that goes into this because imagine this is the thing. So this is tied to what you just said. Let me just say something real quick before I forget it, just because it's important. The thing I figured out it was yesterday and then confirmed over the course of the rest of yesterday and this morning when I did Two more of these machines was that you have to. This is so stupid. It's like an incantation. You have to do this exactly right to see this interface. If you do it wrong, you will not see this interface.
- [46:17]
Richard Campbell
Right. So pentagram, candles, chicken sacrifice.
- [46:21]
Paul Thurrott
Yep. Blood in the face. You got to do it all. Phase of the moon. Yep, yep. No, I figured it out. So I'll talk about the exact steps, maybe, I guess, at the end of the show, because I am going to mention this again, but now I forgot the other thing. I'm sorry. There's so much to. So convoluted. Oh, yeah. So to your Registry entry. Yeah, yeah, yeah. So on my computer right now, the computer I'm using right now, I have turned off Folder backup.
- [46:47]
Richard Campbell
Right.
- [46:47]
Paul Thurrott
It's off. So if I click on the Pictures folder or the Desktop folder or the Documents folder, which I don't actually have exposed here, but if I did, you would see in the address bar of File Explorer the normal set of icons and text. Right. So it's like a picture of a computer, meaning it's local. You know, the little arrow. Desktop. Right, for desktop. That's it. If Folder Backup had not been enabled yet and. Yeah, that's it. I guess that's the whole thing. I'm sorry. If Folder Backup had not ever been enabled, you would see instead of that picture, it would be a button that says Start Backup. So one of the tells, if you will, that you've done this correctly or that it's worked, is that if you. You turn off Folder backup, either this new method, which you can do before it enables itself, or using the traditional method, which is it turns it on and then you turn it off.
- [47:42]
Richard Campbell
Right.
- [47:43]
Paul Thurrott
That never comes back. It's always just the normal computer icon. You don't get the Start backup hint or whatever you call it ever again.
- [47:51]
Richard Campbell
It's gone.
- [47:51]
Paul Thurrott
Yep, That's. So this is one of the things I use to tell whether or not this thing worked. Anyway, if anyone made sense of what I just said, congratulations, you're smarter than I am, because that confused the hell out of me. But the. My point, though, is we focus on the bad things. We focus on the superfluous kind of fun UI things. There's been a bunch of security work done to the platform, the 24H2 foundational changes, the Windows 11 unarmed thing that Richard mentioned, which I actually forgot, which is embarrassing. And then there's little things like this. Like I said, the first time I noticed this was December. It's been elusive. Part of the elusiveness Is. Well, the way it works is. So I'll explain that later. But it's crazy how convoluted this is. But I think this is tied to the CFR thing. Right. Control feature release. Part of the inconsistency is that literally, like I said, you could have 10 computers, they're all inconsistently configured with features, even though they are, to your mind, completely up to date, exactly the same way. So it's. Sometimes these things take a little while, but it's not perfect. It still needs some work. The fact that you could reverse folder backup and have it bring files out of onedrive and get rid of them in onedrive to me is very dangerous and bad.
- [49:10]
Richard Campbell
Very dangerous.
- [49:10]
Paul Thurrott
Like they need to fix that, but they are giving you the ability to determine where you're putting stuff. That's good. Like overall, it's good. Right. I kind of wish there was an option that was like, just bring back the stuff you moved. Like, if it was already there, leave it there. Maybe that's a hard computer science problem. I don't know. But this is actually this to me was the insertification of Windows 11 hit the point where it impacted me so badly I had to make changes. Like, I couldn't deal with this anymore. And that was when I experimented with different things. I went to Google Drive first, which works better than OneDrive, by the way. And now I use Synology Drive and. But it was this forced behavior because I already wasn't using Edge. Right. That this was what put it over the top for me. But those two things together are to me the really bad behaviors in Windows. Right. If I had to pick like one, they seem like the same thing. They're. They're both forced usage of something.
- [50:09]
Richard Campbell
Yeah.
- [50:09]
Paul Thurrott
And designed to get.
- [50:10]
Richard Campbell
Well, in quite a deceptive way.
- [50:13]
Paul Thurrott
Right.
- [50:13]
Richard Campbell
Like it should just.
- [50:15]
Paul Thurrott
Oh, just deceptive in that like, it's like someone stuck in your house and move things around. They didn't take anything, they just moved where it was.
- [50:22]
Richard Campbell
And it's like, no, when you put it back, it moved them again.
- [50:24]
Paul Thurrott
Yeah. And you move them.
- [50:25]
Leo Laporte
Yeah.
- [50:26]
Paul Thurrott
It's like, it's, it's very, it's. It's strange behavior. But the reason Microsoft forces you to use Edge, even when you pick Chrome or whatever browser, is because now you're getting in front of their online services and they have ads and they're making money with ads. The reason Microsoft forces use folder backup explicitly is because you'll need storage and you'll buy a Microsoft 365 tier and pay for that every Year for the rest of your life or something to do with AI and training models and stuff like that, which they insist they don't do, but trying to get you into that world as well, that's why they do this, right? They'll position it as good for you. And by the way, in some ways at least the onedrive thing is good for you in some ways. But it's the disrespect of your explicit choice to me is just the bridge too far. Like, I don't like that. So this change, this is a step back from the cliff. And I wonder if it isn't. Like I said, we just found out, like, hey, we're going to focus on quality. But he didn't just pull that out of his butt on Tuesday. This has been going on for months and months. And I think this folder backup thing is a direct result of this new way of thinking that maybe we shouldn't be so terrible to our own customers. Sure. I think this is like a manifestation of this.
- [51:38]
Richard Campbell
So you got to think Bevan had a whole bunch of folders to read from various parts of the team about things that could be worked on and so forth. And he probably had a priority list before he charged into the team from the senior folks. So that was course all AI based. And now he started to look through the list, he's like, wow, somebody's already working on how awful this is. Maybe we should just make this a point priority.
- [52:01]
Paul Thurrott
Huh? Yeah, imagine that. I, maybe we should do what customers want. Yeah, radical idea.
- [52:09]
Richard Campbell
And to be clear, like, and there's a bunch of people inside of the Windows team that know that and have been trying to do that, but they haven't been getting priority. Right. Like, biggest thing I've ever found as a consultant is somebody's already thought of the right thing to do. They just couldn't sell it upstairs. And right now where they're listening because I'm the consultant, if I can find that guy, I can lift the right message up.
- [52:30]
Paul Thurrott
I, I almost universally, you could go to any big tech, any tech company, whatever it is, and you've got these employees, engineers, wherever they are, playing away and they're working and none of them are like waking up in the morning, like, how am I going to ruin people's lives? So like I want to make this thing, you know, it's like the Google search story, which may or may not be anecdotal or real or whatever, where it's like, we already have every search customer we're going to have. We're gonna have to make Search worse. It's the only way we're gonna make more money. And the guy who missed all of his kids birthdays making search better for the past decade is like, excuse me, you know, what are you talking about? I feel like that conversation happens at every company all the time, everywhere. And that there are guys that work on edge who are like, I'm trying to make the best browser in the world and you're making it horrible for me because all these behaviors in it are terrible and it makes me and my product look bad. And that's not what I wanted. You know, the one drive guys, same thing, right? I mean, none of these people set out to be terrible. You know, McDonald's didn't set out to make us fat. It's just, you know, it's just like a blind view.
- [53:31]
Leo Laporte
They said that's to make us addicted.
- [53:33]
Paul Thurrott
Well, they set out. No, they set out to solve a problem.
- [53:36]
Leo Laporte
Yeah. Which was making expensive food. Yeah.
- [53:39]
Paul Thurrott
But it wasn't.
- [53:40]
Leo Laporte
It was very palatable and good.
- [53:42]
Paul Thurrott
Yeah. Yeah. But there wasn't anything. It was like.
- [53:46]
Leo Laporte
I don't describe evil to people generally. You know, there's a few.
- [53:49]
Richard Campbell
I do it.
- [53:52]
Leo Laporte
You know, it's funny. When you study acting, one of the first things you learn is when you play a villain.
- [53:58]
Paul Thurrott
Yeah.
- [53:58]
Leo Laporte
Every villain believes firmly that they're the right thing, Right?
- [54:02]
Richard Campbell
Yeah, absolutely.
- [54:03]
Paul Thurrott
Yeah. Yeah. I get something. I'm gonna write a story about this. I, my, you know, my wife and I will be watching a movie or watching a true crime thing or whatever, and I always make the same comment, which is, you know what the problem with bad guys is? They can't trust anybody. And they can't trust. They can't trust each other.
- [54:16]
Leo Laporte
They don't trust.
- [54:16]
Paul Thurrott
So the difference between good guys and bad guys is that bad guys will inevitably betray the other bad guys. Like, you can't have two people who robbed a bank. And you tell, both of you agree, yeah, we're not going to touch this money for five years, blah, blah, blah. And one of them will sneak over and try to steal all the money. Inevitably, this is every movie ever made. This is what separates good guys from bad guys. You know what I mean? You can't trust them. So in Microsoft's case with Windows, it's not so much good guys per se. But this is the central problem with pavan and anyone else running Windows, which is, I do believe he's a good guy. I do believe he has the right frame of mind and thinking as hard however you want to Say it. But he also has his boss and his boss's boss coming down saying, excuse me, you need to bring up your arpus or you need to monetize this or you need to AI everything or whatever it is like, you know, and trying to, you know, to balance or juggle those two things is not always possible, let alone easy. I mean, it's, you know, so we'll see. But I see little things and this onedrive thing is, I guess it's little.
- [55:28]
Leo Laporte
But it's so funny that you're saying this because remember me setting up last year, a computer and it was driving me nuts. And honestly, that's kind of the last, that was the last straw for me when Windows. It's just like I shouldn't have to go through this with a brand new system.
- [55:47]
Paul Thurrott
So I can't remember if we talked about this. I apologize if I'm repeating myself, but I will say Friday, someone asked me this question. I did that Friday column. How is my approach to covering this stuff changed over the years? And actually this is a big change. I feel like I might have said part of this, which was 1995. Brian Livingston's writing a secrets book. And that's how you got information about the things going on inside Windows. And he had sources and people. It wasn't like he was delving through the system, but he had people telling him stuff and he could document it. And that was how we found stuff out. And then the web happened and electronic publishing happened. You don't want to publish a book this thick that is on paper that you can't fix anymore because things change or you've made a mistake, whatever it is. And people like me who had blogs and stuff are documenting stuff happening in Windows as it's happening, pre release versions of Windows, Longhorn, et cetera, et cetera. It's an exciting time, but my focus has changed a lot because of the way Windows has changed and the world, the way we get information. There are no more secrets. There's no such thing. No one's going to write a book. Well, maybe someone. This probably is a book. But a Windows 11 secrets book is pointless. There are no secrets. Everything's out there. The truth is out there. It's all Google, AI, whatever, you'll find it. But my focus has changed and I can't tell you the exact timeframes, but I can see it in my own book where it's like, we did this for years and years. This is what you should do. The second you get to the desktop after you Set up a new computer because there's all this stuff that's not configured correctly. And then Windows 10 happens and now 11. It's like, okay, there's all this privacy nonsense in there that you might have screwed up and set up. Here's how you go find that and reverse it and get that setup right. Or you set up Edge for the first time and you click, click, click to get through it. And you just agreed to give them all of your telemetry, not just some of it. And you're going to sync everything you do in Google to Edge. You just open up your whole stupid world to Microsoft without thinking. And so I can document, like, if you're just doing it right. Like, now here's how you set that up correctly. If you screwed it up, here's where you look to reverse all those changes. And so I have become like the DE insertification guide to Windows. Essentially. It's like, here's this lump of stuff. There's a central core of this, which is excellent. I still really like Windows, prefer it to whatever else. But there are these behaviors I don't like, and I think most people wouldn't like if they understood them. And how do you fix those? And that's. So when I see something like this, when OneDrive did the October, I'm going to call it 2023, probably forced folder.
- [58:27]
Leo Laporte
Backup thing, that was the thing that bit me.
- [58:30]
Paul Thurrott
That was bad. That put me over the top. I had to write a chapter for the book called how to Configure Microsoft Edge Whether you use it or not. Because it's actually important to configure this thing correctly if you're not using it, which is so stupid. But if you don't, it's still going to be running in the background all the time. Like, there's things you have to do. So I become. I. I don't know what you call this. Is this like a defensive posture? I don't know. But I just look at the problem and, you know, it's like, can I solve this? And, you know, yeah, My, my, what.
- [59:03]
Richard Campbell
Do I got to do to be productive on my machine? Like, that's really what it comes.
- [59:06]
Paul Thurrott
Yeah. How can I help other people get there? You know?
- [59:09]
Richard Campbell
Yeah.
- [59:09]
Paul Thurrott
As well.
- [59:10]
Leo Laporte
You know, I hate it when people, you know, interrupt what you're doing and try to make money. But if you don't mind, I'd like to pause for this.
- [59:17]
Paul Thurrott
Nice.
- [59:18]
Richard Campbell
I now that. That's a segue.
- [59:21]
Paul Thurrott
Like, holy hypocrite. I gotta tell you, I respect what you're doing right now.
- [59:26]
Leo Laporte
We'll be right back. Complaining about monetization after this word from our sponsor, Paul Thurat, Richard Campbell, great to have you. You're watching Windows Weekly. Great to have you too. Our show today, brought to you by zscaler. I actually really happy to talk about Z Scaler, the world's largest cloud security platform. And they solve a big problem we're seeing. You know, it's funny, we're seeing this in action right now. Everybody wants to use AI. Every company is trying to figure out how to use it. I think the message has gotten through. I certainly hope it has in your company. That it's also risky that AI can exfiltrate proprietary information. You know, you can lose sensitive data. AI is giving the bad guys new tools too, right? We're starting to see all sorts of weaponization using AI and what AI gives bad guys is the ability to operate at a much faster pace, at a much broader scale. Attacks are not only, you know, trying to get in and encrypt your data, but even trying to get into enterprise managed AI to, to get your data. Generative AI increases opportunities for threat actors. They can rapidly create phishing lures. They can write malicious code. They're using it to automate data extraction. One, one bad guy now can do the work of 100. So it's such a double edged sword. It's so good and it's so bad at the same time. There were just as an example, 1.3 million instances of Social Security numbers leaked via AI applications. You know, then that number came out before OpenClaw, before Claudebot. I think that number is probably a lot higher now. ChatGPT and Microsoft Copilot saw nearly 3.2 million data violations. So don't think just because you're, you know, you're using the corporate version of Copilot, you're safe. You gotta, you gotta really think about your organization's safe use of public and private AI. Chad Pallet, acting CISO at BioIVT, chose Zscaler for this. He says Zscaler helped them reduce their cyber premiums by 50%. That's fantastic. But at the same time doubled their coverage and improved their controls. Take a look. We got a video from Chad.
- [61:52]
Paul Thurrott
With Zscaler. As long as you've got Internet, you're good to go. A big part of the reason that we moved to a consumer consolidated solution away from sd, WAN and VPN is to eliminate that lateral opportunity that people had and that opportunity for misdirection or open access to the network. It also was an opportunity for us to maintain and provide our remote users with a cafe style environment.
- [62:17]
Leo Laporte
With Zscaler Zero Trust plus AI, you could safely adopt Genai and private AI to boost productivity across the business. I mean, that's, that's really great, right? Their Zero Trust architecture plus AI helps you reduce the risks of AI related data loss and protects against AI attacks to guarantee greater productivity and compliance. This is a tool you really need to take a look at. Learn more@zscaler.com Security that's Zscaler.com Security.
- [62:51]
Paul Thurrott
We.
- [62:51]
Leo Laporte
Thank him so much for supporting Windows Weekly. And now let's continue with the fest.
- [62:59]
Paul Thurrott
No, no, I didn't mean it like. No, but Windows sucks. So.
- [63:06]
Leo Laporte
No, but this show is about being honest about the flaws and the benefits and most importantly, helping you, you, our dear listeners, use it effectively. We're all in the same boat, right? So how do we, how do we get the most out of Windows?
- [63:23]
Paul Thurrott
Now it's time. Yeah. How do I.
- [63:28]
Leo Laporte
No, no, I think. No, this is what your books are about. This is what you just wrote an article, I thought, really good article@Tharat.com about, you know, taking Windows 11 and DE and shittifying it, if I may coin a phrase.
- [63:42]
Paul Thurrott
Right, right. Yeah. Yeah. So, I mean, yeah, I'm trying to update my book for, you know, 25H2 and I feel like I almost have to. I think maybe it becomes a separate thing. It's going to be like maybe this is its own little book, you know, just fix the problems. Yeah. Rather than straight reference. It's like a how to kind of thing. So we'll see, we'll see what comes to that. But let's see, outside of the pavan, we'll see what happens to Windows stuff. I'm embarrassed. I lose track of this every month actually, so maybe I shouldn't be all that embarrassed. But last Tuesday, the day before we did Windows Weekly, last week was actually the Tuesday week D, which is when we usually get the preview update. That is the preview of the next month's patch Tuesday update that came and went without me even noticing. It was the fourth Tuesday of the month. Also the week of the end of the month. It's kind of weird the way it lined up, I guess. But on Thursday last week, they did finally release the week. The updates, which are the same across as far, I should say the same, actually. I think in this case literally the same kb, the same preview update, what we used to call a cumulative update or quality update or security update. Or whatever. Every week we have a different term, doesn't matter anyway, 24 and 25 H2, same changes. Right. And so last week or the week before, I don't remember, we talked about some release preview builds. Same thing. 25, 24, it's just the same features.
- [65:13]
Richard Campbell
Right.
- [65:13]
Paul Thurrott
And so this is. I'm trying. There was a bunch of stuff that's actually semi important in there. But you know, a week from this coming Tuesday will be patch Tuesday and then we'll see this stuff hit stable or start to hit stable because literally none of the new features are just coming to everybody on day one. That's the way they do things. It's terrible. And so I'm going to boil this down to just the essential stuff, because who cares? But this is the smart app control change where you can turn it on and off now, right. Like a normal feature. Good Windows, hello Ess, external fingerprint readers. Right. Which you have to get a compatible version of for that to work. You know, the MIDI stuff, Cross device resume improvements for people on Android, et cetera, et cetera. So that all went out finely belatedly last Thursday and then it was last night. Today, I don't even listen to what's today's date. February 3rd. Yesterday. Wow. Yep. New builds for dev and beta channel. Same features of, I should say feature. There's only one new feature. They're both on 25H2, but different build paths. My belief is that dev will eventually go to 26H1H2, but for now they're describing these both as 25H2 streams or whatever. The single new feature, interestingly, Sysmon. Right. This is part of the Sysinternals family of tools that mark Russinovich created 20 years ago. A long time ago, I guess. It's really difficult to install. And so Microsoft said, you know, again, you might look at this as like a little bit of a quality thing. This is not something normal people will ever need or want. But for admins or anyone doing support, Sysmona is critical and it's now a lot easier to install. So it's actually an optional features, like more Windows features. It's just going to be in a dialogue. You do have to run a command line to actually get this thing working. But it's not as onerous as it was or as it has been forever, actually. Right. So that's kind of cool. Like, nice to see. You know, Mark got a tool into PowerToys first. Zoom. Right. Part of.
- [67:34]
Richard Campbell
Part of Power Toys back in the day.
- [67:36]
Paul Thurrott
Yep. And Now Sysmon is part of Windows, and I. I suspect there's some taskman functionality, etc. That came out of Mark's work too. But it's nice to see something like this kind of make its way in there because this is not. This is not a fun feature to talk about. It's not something my wife is going to get excited about or whatever.
- [67:52]
Richard Campbell
This is very much a plumbing tool, but for those who need it, you really need it. Like, Sismon is a godsend when you're trying to understand what's going on.
- [68:00]
Paul Thurrott
Yes.
- [68:00]
Richard Campbell
So you just want to really very kill something.
- [68:04]
Paul Thurrott
Yes. Right, right. With malice.
- [68:07]
Richard Campbell
Exactly. You. You die bad. Die bad now.
- [68:11]
Paul Thurrott
Exactly. Yes.
- [68:13]
Richard Campbell
I don't even want the memory back. Just leave that memory locked out forever.
- [68:16]
Paul Thurrott
Yep.
- [68:19]
Leo Laporte
I'm so glad they put Sysmon in there, though, by the way.
- [68:21]
Paul Thurrott
Yeah, it's cool.
- [68:22]
Leo Laporte
And I've seen a lot of praise for that. People are very happy.
- [68:24]
Paul Thurrott
Yeah.
- [68:25]
Leo Laporte
Because the people who know about it.
- [68:27]
Paul Thurrott
Yep. Yeah. You were installing the stuff anyway, you know. Yeah.
- [68:30]
Leo Laporte
So everybody should have it. It's great.
- [68:32]
Paul Thurrott
Yeah, I think it's. It's cool.
- [68:34]
Leo Laporte
Sysinternals is literally the first thing I install on a new Windows box. I agree. Which is amazing.
- [68:39]
Richard Campbell
Yeah.
- [68:40]
Paul Thurrott
Yep. Yeah, he's.
- [68:41]
Leo Laporte
Is he still there or did he leave?
- [68:43]
Paul Thurrott
Oh, yeah, no, he's the CTO of Azure.
- [68:45]
Leo Laporte
Azure, yeah. Good job.
- [68:50]
Paul Thurrott
He's a smart guy in a room full of smart guys.
- [68:54]
Richard Campbell
Yeah. Good gig. And his. The guy, the folks around him in that office of cto, they're all astonishing. Like, it really is a remarkable collection.
- [69:03]
Paul Thurrott
Yep, Yep. All right. Yeah, they're like the, like the big brain people or whatever. You know, they're wrong with their white coats and stuff.
- [69:11]
Richard Campbell
Very thoughtful.
- [69:13]
Paul Thurrott
All right, so last week, toward the end of the show, Microsoft released their earnings. Kind of a blowout quarter, by all accounts. Right. $38.5 billion in net income, $81.3 billion in revenues. I think I mentioned. Yeah, I did. I mentioned before. I listened to that call. I then went through the transcript the next day, took notes and everything. You know, what's going on. And if there's a consistent thread to Microsoft's earnings other than the bazillion dollars they make every quarter, it's that Wall street has finally opened up to the notion that maybe they're doing something a little screw with money. We should ask about that. It started tentatively, and then this past week was kind of interesting because Amy Hood did her best to make it look like these were the stupidest questions she had ever heard. But every single one of them rephrased the question and just asked the same question again. Which basically boils down, let it go. Yeah, the wimpy school of economics doesn't seem to be working. Meaning I will gladly take AI infrastructure today for a payment tomorrow is not necessarily a good business model. Well, the wimpy business model, I love it because they all ask the same question, like I said, in different ways. And it started off as ROI. So you have this spending that's escalating. AI infrastructure spending is up 66% year over year in the quarter, right? That's crazy. Last year they spent, I think it was 84, 85 billion dollars this year on infrastructure. This year it could be 150 billion or more if nothing changes. So this first guy, I don't care who it was, I don't care who these people are, it doesn't matter. He said, roi, I don't get this. He's like, you're spending all this money. Azure revenues have slowed. There's no possible return on investment in sight. And she said, the risk isn't there.
- [71:08]
Richard Campbell
So that answers the question.
- [71:11]
Paul Thurrott
She said, look, we're doing long term decision making, right? We're investing in all the layers of the stack. And then she said the thing that to me is this is my version of voodoo economics, which was, she said, the hardware that they're buying for these data centers, meaning the CPUs, GPUs, racks, hard drives, whatever it is, all of which has its own kind of life cycle, which Microsoft has doubled and now tripled to make it try to make sense, has all been accounted for by the promissaries they've received from customers and partners who intend to spend money sometime in the future.
- [71:54]
Richard Campbell
Wow.
- [71:55]
Paul Thurrott
The biggest of those companies is by biggest by promise, not by actual size or money in the bank is OpenAI, which now has a unique kind of a financial disclosure relationship with Microsoft because of the way their relationship has changed. There's actually a little bit more information there about where money is going or not going or whatever. So this didn't satisfy the first guy, so we moved on to the next one. Blah, blah, blah, whatever. But the net effect here is that Microsoft is spending $37.5 billion in one quarter on infrastructure. They will spend a little bit less than that this quarter, but then it will go up again in the future quarter because that's just the nature of the year essentially. But it's going to be 30 something billion, right? That's money spent. That's not a promise to spend. They've spent it. They would have spent more if they could have. They've been really overt about that. But this is what they can do. The commitments they have are just promises. This is not money. This is not. They don't. I mean, some of it. I'm sure they're getting paid for some of it. I don't mean it like that, but I mean, you're claiming that over a 5 to 10 to 12 year lifespan, depending on the hardware component, that that thing has been accounted for for its entire useful life. Would make sense if you had gotten that money already, but you have, not most of it. And that is. This is like we have spent money here and over here. We're betting, literally betting. This is gambling that money will come in and that will pay for this.
- [73:36]
Richard Campbell
Right, okay.
- [73:38]
Paul Thurrott
And generate a profit, perhaps. Right. Is that the point? It's business. Last time I checked. I don't know what this, you know, I'm not a money guy, but I know what it means to spend money and to promise money.
- [73:52]
Richard Campbell
You know, didn't the stock price reflect how well Amy did the next by the next day?
- [73:59]
Paul Thurrott
I'm glad you asked that. So Microsoft lost $357 billion of value in less than 24 hours. That is the biggest wipeout of financial wealth in that company's history. It is the second biggest in the history of history. The only one that was bigger was Nvidia last year when Deep Seek happened and everyone kind of fell for a.
- [74:26]
Leo Laporte
Little while that everybody freaked out and was wrong, right?
- [74:28]
Paul Thurrott
Yeah. Well, I mean, they should have been freaked out, honestly. Yeah. I'm not sure how they did because the central thing that deepseek accomplished didn't go away. But whatever they lost, everybody adopted it.
- [74:40]
Leo Laporte
That's what happened. You know, it's interesting because maybe this story gets revised a little bit as of yesterday because, I mean, initially we talked about it last week, it was, well, Microsoft's spending so much on AI and not making money. But you saw the stock market tank yesterday. And in this case it's because people realized the future of software isn't great if people are coding their own software. Right. Maybe that's a little bit of it too.
- [75:08]
Paul Thurrott
We're going to kind of gloss over this in a bit because there's going to be more to come. Right. But last night AMD announced earnings. AMD is going after Nvidia and AMD is. That's a big target. They're not getting there very quick. They have a kind of A soft outlook for this year. And what you're starting to see there, as with Microsoft, they focus on Microsoft, obviously, but analysts are starting to ask questions. It's like you have a lot of promises for money. A lot of it's coming from OpenAI, by the way. It all seems to be coming from the same place. But, you know, do you have any sense of when you will actually realize that as revenues? And they do not. And that's not a good answer. You know, that's not a financially fiscally responsible answer, but that's their answer because that's what everyone's doing. In Microsoft's case, you may recall, I think I said this last Wednesday, right at the end of the show when we were kind of looking at this briefly, they had gone back to earning a bigger profit than they had spent on AI infrastructure. That was something. I believe it was two quarters, maybe three in a row, where their profit was less than the amount they were spending on AI infrastructure, if that makes sense. But if you actually dive into this number, into their numbers, there's something called. Again, not a money guy, but this makes sense, should make sense to anybody. Something called free cash flow, right? So, like, if you. One of the things I see a lot when I do write up these financial results from whatever companies, like Spotify does this all the time. There's different terms that mean profit, right? To me, I'm looking for literal profit. So literal profit to me is net income. Net income is like operational profit minus operational costs, if that makes sense. So Spotify will say something like, oh, look, we were profitable four quarters in a row, but one of those quarters, they were only profitable from an operating perspective once you factored in the cost of them doing business. They actually were not profitable. They actually posted a loss. To me, that's the literal truth, and I don't understand why we're talking about numbers. And we can't just have facts and not facts, but this is the way this world works. Microsoft's free cash flow, which is the cash they have on hand. I'm sorry, the cash they made in that quarter after capital expenditures. Remember, this is a company that had a. Well, no, actually, I didn't say this. They had a cash flow in the quarter, meaning cash coming in $35.8 billion. But chop off the money they spent on AI and it goes down to 5.9 billion. So this is this company which earned $81.3 billion in revenues, walked out of the door with 5.9 billion in cash, which is like saying, I just spent $2 million on real estate and someone handed me a 10 and asked for change. You know, like that's. I'm not saying that's literally what they made. That's not how finances work. I get that.
- [78:09]
Richard Campbell
But.
- [78:09]
Paul Thurrott
But at the end of the day, if it was me, if somehow I was controlling this money, I would have been left with the 5.9, not the 34 point, whatever they said it was, or 31 point because, you know, you can. This is how financial, you know, manipulation works. Right. Satya mentioned the hundred million. Nope. The 1 billion. Sorry, I'm doing a Dr. Evil thing there. The 1 billion Windows 11 users throwaway line. I thought that was kind of fun. Reiterated the fact that you, meaning you normal person, not me, big brain person, can think of agents as the new apps. Right. Didn't really explain what that meant. But that's how they're going to expose agents in the Windows user interface, I guess. So I think of agents as kind of like background processes, but that's fine. One of the things that Microsoft is starting to do to differentiate itself from what they call hyperscalers, meaning companies like Google, Microsoft, Amazon, and I think that's it. Maybe Meta, maybe Oracle, I don't know. But basically those three companies is they offer a choice of models. Right. And that's something they're going to do more and more, I think, across the board. And I don't think relying on a person who's paying for Microsoft 365 to pick the model they want to do, the thing they're doing in Word or whatever makes any sense. But there is something to be said for an orchestrator doing that for you. And that there's an advantage to that because the models that are best for whatever task change all the time. And if Microsoft can keep on top of this, that might actually evolve as an advantage, which is good because Copilot is terrible and is not doing well. Right. He gave a hard.
- [79:49]
Richard Campbell
The AI foundry tool is very good and. But it also allows models.
- [79:55]
Paul Thurrott
Yeah, but ultimately you're still kind of picking something like yourself. To me, this needs to be an automated process, maybe an agent.
- [80:03]
Richard Campbell
It's not a consumer product.
- [80:05]
Paul Thurrott
No, no, but it will be. Right. I should say. I'm sorry, not that won't be, but the capability of the model being picked for you I think will be a consumer capability in time. I don't think it's here, but I believe what he said was Microsoft 365 copilot, which is that paid tier on top of Microsoft 365 in the commercial space. 4.5 million seats there. Oh, is that the right number? I might have that number wrong. Maybe the number's wrong. Let me. Let me see if I can find. Sorry. It's some single digit million. Let me just make. I don't want to. Nope. Sorry. I'm sorry. It's 15 million. That's double digits. So I'm wrong. Sorry about that. 15 million paid seats. But there are 450 million paid commercial Microsoft 365 seats, which means that approximately. I think it's 3.35%.
- [80:56]
Richard Campbell
Yeah. Whatever the number, it's 3.3333.
- [80:59]
Paul Thurrott
Yeah. There you go.
- [81:01]
Richard Campbell
That's not great. That's really not great.
- [81:03]
Paul Thurrott
There you go. That's how I would say it too. Interestingly, by the way, there were 4.7. This is just an aside in a way, but there are 4.7 million paid GitHub copilot subscribers. That's about 1/3 the number of Microsoft 365 copilot. But the addressable market is tiny. Compared to Microsoft 365. That thing's going gangbusters. I think that's kind of interesting.
- [81:27]
Richard Campbell
Yeah. Of course it's not just Microsoft devs. You got to talk about devs all up. So.
- [81:32]
Paul Thurrott
Right. I think that's fascinating. So that's good.
- [81:38]
Richard Campbell
They're also the original product. Right. They got there first. 2021.
- [81:42]
Paul Thurrott
Yeah.
- [81:42]
Richard Campbell
You need to head to ChatGPT.
- [81:44]
Paul Thurrott
It's also the single easiest sell in a way of AIs or in a way. Right. Like the developer use case is so strong. Like when I said like I will. I'm not paying for AI. If I was a developer, I would absolutely pay for AI like that. Like that to me makes total sense.
- [82:02]
Richard Campbell
Yeah. Figure something like 30 million developers in the world and 5 million of them are using your tool.
- [82:09]
Paul Thurrott
Yeah. It's amazing.
- [82:10]
Richard Campbell
No, you've.
- [82:11]
Paul Thurrott
No, you've killed it.
- [82:12]
Richard Campbell
Right. Like that's huge. And with lots of markets ago, the.
- [82:15]
Paul Thurrott
Developer space is tough because a lot of those guys are going to be on Linux or even the Mac. They're going to be using command lines and Visual Studio code type tools and maybe a lot of web.
- [82:24]
Richard Campbell
It's hard to argue with GitHub's dominance in source control and some degree even project control. So they do see across the whole spectrum there.
- [82:34]
Paul Thurrott
Yep.
- [82:36]
Richard Campbell
It is a success story without a doubt. And you're right, developers are well suited for what these tools could do. We're really good at criticizing other people's code Even that code came from not a people.
- [82:45]
Paul Thurrott
Yes. Yeah, AI is really good at criticizing my code too, by the way. But we'll get there, it's okay. And then just kind of on the client side. Not a lot. God, man, this earnings announcement was a lot like what going to build used to be like where you're like, all right, I can't wait to see what they're doing about Windows. And all they would talk about is like cloud and whatever you're like, what happened? What was that? What's going on? There's just not a lot there. Nadella, up top, as part of his all up notes or whatever discussion of the quarter said Windows Edge and Bing all gain share. Okay. No color to that whatsoever. Windows revenues from PC makers only went up 1% in the quarter. As a reminder, holiday quarter. And I would Describe the Windows 10 upgrade cycle similar to AI, which was, this is coming, it's coming, it's coming, it's over, it never happened. I think the bump that we saw for PCs this past year, which was small, small single digit gain, actually was tied more to worries about RAM prices going up in that companies or retailers or just individuals maybe were buying computers a little earlier or in mass, if you're, if that was your business, to have them in stock so that you bought them before the prices went up even further, you know, yeah, that. And they kind of indicated that. But they kept talking about this Windows 10 upgrade cycle and I, I don't know, I must have missed something because I don't think it, I don't think it really amounted to much.
- [84:20]
Richard Campbell
Well now the hardware crisis is so significant.
- [84:22]
Paul Thurrott
Like, yeah, no, it's going to impact the market in the opposite direction right this year.
- [84:28]
Richard Campbell
And this is the advice I gave the beginning of the year to administrators. I said, this is not a year to buy computers. You do not want to pay these prices on a five year amortization. Keep your old machines, extend your warranties, wait till this ends, do it the.
- [84:41]
Paul Thurrott
Microsoft way and make it a 10 year amortization. I mean, you know, I mean, it.
- [84:46]
Richard Campbell
Just, oh, look how mysteriously. Fans and spinning drives won't fail for an extra five. They'll be fine. They'll be fine.
- [84:53]
Paul Thurrott
I don't, I think I was saying this to Brad, like one of Amy's claims was that these things could last longer because they became more efficient over time. And I equated that to like when you have a tire that's brand new and it's all grippy and everything, but over time it gets bald it's more efficient. So the tire is physically smaller, so the spin is smaller and thus it's more efficient. Thus you're saving money on gas. This is the wimpy school of economics, folks. This is where I'm at.
- [85:24]
Richard Campbell
Nice.
- [85:25]
Paul Thurrott
We're just making stuff.
- [85:25]
Richard Campbell
I'm used to Amy Hood knocking these quarterlies out of the park, like just dancing.
- [85:32]
Paul Thurrott
I mean, arguably she is right, that.
- [85:35]
Richard Campbell
Market would say otherwise, you know.
- [85:39]
Paul Thurrott
Well, yeah, so that's. I. It's not just Microsoft.
- [85:41]
Richard Campbell
Right.
- [85:41]
Paul Thurrott
I want to be super clear. You're going to see this level of scrutiny with Nvidia. Nvidia is in a tough spot.
- [85:50]
Richard Campbell
Far worse than Microsoft.
- [85:52]
Paul Thurrott
Yeah. Because they're like the, the, if this will be, this audience will appreciate or hopefully even understand this reference. But they're like the Carly Rae Jepsen of AI. Right. They had like the biggest hit in the world.
- [86:05]
Richard Campbell
Yes.
- [86:06]
Paul Thurrott
It was never going to be duplicated.
- [86:09]
Richard Campbell
Yeah.
- [86:10]
Paul Thurrott
And unfortunately everything you do in the future will be held up to that standard and it's just never going to happen, you know, so, so far so good. Right. We'll see what they do this quarter. But like eventually that's going to fall. Just like azure, which was 70% growth for years, finally kind of falls apart, like. Yeah, you know, we'll see. But I think the level of scrutiny that Microsoft started to get last quarter and got this quarter, Apple's not getting it. Because Apple's not spending anything on AI. They're escape rate.
- [86:41]
Richard Campbell
But no, they're immune. It's what's going to happen to Google, what's going to happen to Amazon? Like those are the ones you really watch. The other hyperscalers is the one that matters.
- [86:50]
Paul Thurrott
Yeah. And actually. Right, so I'm sorry, the same you've.
- [86:53]
Richard Campbell
Been really talking in terms of Amy Hood, like it's being a CFO run company and the only thing a CFO can do is improve shareholder value. And when you don't do that, you know, it's not the CFO gets fired, it's the CEO that gets fired.
- [87:09]
Paul Thurrott
That's right. That's right. Well, I mean, look, the success she has brought to Microsoft is undeniable, without a doubt. It's just that this AI thing is, I think, going to catch up with all these companies.
- [87:19]
Richard Campbell
Well, and it's the thing, it's all of these investors are hovering on the edge of the seat saying, is it bubbles now? Is it now? How about now? Maybe now. And, and they're looking. And so suddenly all this obfuscating reporting that you've been getting away with for years. It suddenly Google, they're nervous because have you hidden a bubble burst?
- [87:40]
Paul Thurrott
I guarantee this was back in October just because of the timing for earnings releases and so forth. But late last year at some point the Wall Street Journal some financial analyst guy came out and was like this seems like it's smoke and mirrors. I'm like, oh, welcome to the party buddy. I am not a financial analyst but I've been saying that for about two years. I don't understand what's happening here.
- [87:59]
Richard Campbell
There's a thing called the Ship Schiller PE ratio. I don't know if you ever looked at this. Y so Shiller PE ratio is a way to offset PE over time. It looks over a 10 year period rather than just annually and again across the s and P500 and it sort of smooth things out and sort of and it shows like, you know the median over 10 years is like 17 times.
- [88:24]
Paul Thurrott
Right.
- [88:24]
Richard Campbell
The highest it ever hit ever, ever was in the end of 99 during the dot com boom at 44. The second highest was last week at 41.
- [88:39]
Paul Thurrott
Yeah. Wow. There's, there's so much that goes into this and, and I'm, I'm just not gonna, I don't have the, I don't know, incentive or interest or whatever. But even things like just GAAP versus non GAAP accounting principles, it's like we have this legal standard for how you have to report your earnings, which they all do is this GAAP generally accepted accounting principle. Right. But Microsoft and most of these other companies too also do non gaap. And it's just like a. It's like we legally have to say this is how our business is doing because that is how it's doing. But we have this other thing that makes it look better and so we'll just kind of talk about that too. And it's like guys, what are we doing here? Like it's, it's bizarre to me. That's overly simplistic. I know. But anyway, a couple of, just a couple of quick things. I wrote this in the notes for Microsoft 365 but this actually is across the board inside Microsoft. If there is any impact of AI on a business, they're now paying for that to some degree. This has become part of their cost of doing business that the AI infrastructure costs that are related to Microsoft 365 related to Azure, whatever it might be, the cost of that stuff is actually being split up and is being spread across the company. Right. To, you know, again not to hide. I mean to hide it, that's a strong term. But to hide it. Xbox fell off a cliff again. Again. Holiday quarter. This is what blows my mind. I get that hardware revenue is going to be down. They're trying actively not to sell these things. 32% though year over year. How, how, like how do you fall? You sold six last year and you sold four this year. Like what is that? Like how does that even happen? But the, the real mind blower to me is content and services. This is straight up games game pass. This is, you know the stuff that actually is a good business. That was down 5% year over year. Wow. Look, I know Call of Duty Black Ops 6 and this is when they.
- [90:33]
Richard Campbell
Jack the prices right. So they just turn, they get a lot of people to cancel.
- [90:38]
Paul Thurrott
Yep. Holiday corner for X. That's crazy. Like that's to me that's, that's a disaster. And then there was this. This came up twice. I love this. Microsoft has to sell standalone versions of their office suites. They have made these things terrible. You can only install it on one computer. Remember it used to be two. You can't move the license to a new computer. It's all these like, you know, obviously you're not getting updates, like functional updates, whatever. So it was like 2019, 2021. I think the latest version is 2024, 2025. I can't remember the, the end of it but that thing sold way better than Microsoft thought. It actually materially impacted the Microsoft 365 business. Kind of like when server does really well and it goes into the business that's part of Azure and they're like yeah, we don't know what happened. That actually surprised them. And Amy Hood said in her forward looking part of the comments at the end of the call that her expectation was that that would go back to normal for this quarter. But I'm going to look at that. I'm curious. It would be interesting if it sounds.
- [91:41]
Richard Campbell
Like a sovereignty issue.
- [91:43]
Paul Thurrott
Right. Like there's a lot. Yeah.
- [91:46]
Richard Campbell
Anywhere outside of the US right now.
- [91:48]
Paul Thurrott
No, that might not be temporary. That was my point.
- [91:52]
Richard Campbell
Maybe up to another three years of this.
- [91:54]
Paul Thurrott
Yep. So I don't know. Look, not everyone's like me. I saw these computers buying a version of Office for every computer wouldn't make any sense. But for most people or even for a lot of small businesses or whatever, you just need Office. It's going to work for. I think the lifespan now is probably closer to five years or something. It's not 10. Like it used to be. But like I think this year. Yeah, I think this is this year. The 2021 version goes out of support, so they'll probably announce it 2027 or 6 or whatever the heck it is. I don't know. Anyway, I thought that was kind of interesting. And then, then we have these other earnings. Right. So AMD to me looks like they're doing great, but they're not really threatening Nvidia and their stock tanked as well. Apple crushed it, but we kind of knew that was going to happen. They telegraphed that. The little factoid or that's a fact. The tidbit I will throw out there is the iPhone. Not for the first time, but the iPhone by itself made more revenues than all of Microsoft combined. Yeah, incredible.
- [92:58]
Richard Campbell
You look at $80 billion. Wow, that's a hell of a quarter. And then you look at Apple looks.
- [93:02]
Paul Thurrott
At, it says, yeah, that's the iPhone, you know.
- [93:04]
Richard Campbell
Yeah.
- [93:04]
Paul Thurrott
And, and look that that's.
- [93:06]
Richard Campbell
It is also their monster.
- [93:08]
Paul Thurrott
So.
- [93:08]
Richard Campbell
Okay. It's not like they have anything else.
- [93:10]
Paul Thurrott
Billion out of 143 billion. And there's a really strong case to be made that the majority of the revenues they make from services from the ancillary hardware like watch, etc is all dependent on iPhone. So those are indirect revenues from iPhone too. I mean you could probably make the case, yeah, definitely, 110, 120 billion. If there was no iPhone, that would all just disappear. Right.
- [93:30]
Richard Campbell
But this is also when iPhone sales are not at their strongest. Like it's the 16th version of the phone. It's kind of running out of ideas.
- [93:40]
Paul Thurrott
Yeah. So part of the reason the iPhone did particularly well this quarter was just a randomness of timing. You know, people. There was a big upgrade cycle from the pandemic. Those phones are now four, five years, whatever that is, four years old.
- [93:55]
Richard Campbell
So it was time to flip. And then tariff threats.
- [93:58]
Paul Thurrott
Yeah, right. And then, you know, look, the, the truth is it was a great upgrade. You know, if you had a four or five year old phone, the new iPhone looks awesome. I mean, there's no doubt about that.
- [94:07]
Richard Campbell
There's never a question about it being a great phone. It's just. Is it that much greater than the last phone?
- [94:12]
Paul Thurrott
No, it's incrementally better than the last phone. But it's, it's an orange and I would argue that's transcendent. It's in orange, but you know, it's orange, but it's orange. It's like black velvet or red velvet. And my daughter's like, it's the same. It's the same. It's just chocolate cake. I'm like Kelly, it's red velvet.
- [94:30]
Leo Laporte
It has coffee in it. That's what makes it red.
- [94:33]
Paul Thurrott
It's red, it's brown.
- [94:34]
Leo Laporte
That's a big difference.
- [94:35]
Paul Thurrott
I don't understand why you don't understand that. Yeah. And then I believe today in fact this. Maybe it'll happen anytime. Alphabet or Google really will announce their quarterly results as well. And I'm going to go to the low. They already did though. There it is. I was going to. I'm sorry, before I look at this number, I'm going to say they. I bet they did better than Microsoft and I bet they're doing awesome. And it is. What is it? I just looked at my feed and it was the top story they made. Oh no, not quite as much. 1 13.8 billion across all of Alphabet. Mm. Yeah, something 60 to 70% of that's gonna be ads obviously. Just trying to see what if there's anything notable in here.
- [95:22]
Richard Campbell
What's the.
- [95:22]
Paul Thurrott
Google advertising's up big. What's the net rev net across the whole thing? That's. That's the. It's net income or net apples. Revenues. Revenues. No, we're talking about Google for the quarter is 113.8.
- [95:37]
Richard Campbell
I thought that was gross.
- [95:38]
Paul Thurrott
No, that's revenues. That is revenues. Net income. Sorry, is 20. Wait, no. 34.5.
- [95:46]
Richard Campbell
So that's right in line with what Microsoft made.
- [95:48]
Leo Laporte
Microsoft did very well, didn't they Apple? Apple, of course. Because their margins, their margins were almost 50% and on service it was 75%.
- [95:58]
Paul Thurrott
On a largely hardware based business.
- [96:00]
Richard Campbell
Yeah, yeah, yeah. But that's something to be clear, Microsoft and Google, they're not software companies anymore. They're cloud companies. They own a ton of infrastructure that costs them money.
- [96:10]
Paul Thurrott
Right.
- [96:10]
Richard Campbell
It appreciates.
- [96:11]
Paul Thurrott
It's essentially hardware. Yeah, right. That's a different kind of hardware.
- [96:14]
Richard Campbell
They're all hardware companies now. I would argue their most valuable assets going to be real estate. Right. They've become McDonald's. They. They own data centers.
- [96:23]
Leo Laporte
Yeah, soon.
- [96:24]
Paul Thurrott
Well that's why I dress up in a clown outfit. Yes. Wow. And under the ocean.
- [96:31]
Leo Laporte
And you're listening to this wonderful show called Windows Weekly. That's Paul Thurot there in the middle. That's Richard Campbell on the right. I am Leo on the left. And we're so glad you're here. I just had to say that I have to say that every once in a while. It makes me happy. What else is. You want more earnings learnings Anything else?
- [96:52]
Paul Thurrott
No, that's it for earnings. A couple of AI things. This is. I'm curious to see how this goes, because I have a website, but Microsoft is looking at making what I would call an app store for content creators that want to license their content to AI companies. Essentially, it's called the Publisher Content Marketplace. This is like closing the door after the horse left. The horse being the New York Times is selling them for stealing all the content. But. But, yeah, okay, they are working with major publishers, USA Today, Hearst, Conde Nast, et cetera, et cetera, and just trying to figure out a licensing and pricing model that makes sense. So there's not much to say yet. But right now, it's not for people like me. I'm not like, I got Bob's store here on the corner. Could I sign up? Like, yeah, it's cute, but major content creators first, and then we'll see what happens. But this is inarguably the type of thing that has to happen at some point. So it's good on that level. And then to Leo's kind of hilariously hypocritical advertising thing, I find it amusing that Anthropic will use an expensive. It's actually two expensive super bowl ads to advertise that Cloud will remain advertising free, unlike ChatGPT. But, you know, so we can make fun of that. And I just did. But the. By the way, they're paying $8 million or more for every 30 seconds of airtime.
- [98:28]
Leo Laporte
Isn't that amazing? It's not just them. It's every.
- [98:31]
Paul Thurrott
Oh, yeah, no, I'm sorry. That's just the cost. But, you know, they, they make the point, like, look, there are good places and bad places for advertising. I guess TV during the super bowl is a good place, you know, in line when you're talking to Cloud about your life's angst and, you know, whatever terrible problems you're having, maybe it's not the best case, best time. And I, you know, I agree with that, actually. I mean, that's.
- [98:52]
Leo Laporte
There's more, even a larger concern, which is that it will taint the results. Like.
- [98:58]
Paul Thurrott
Yeah, and, and they, yeah, and they mentioned that. And, and there's the. Yeah, the fear that advertising will, you know, put your finger on the scale, so to speak, of what you're seeing as results. But there's also just, like, just the noise of that kind of stuff. The, you know, you're, you know, it's like, I don't want to throw anyone under a bus, but imagine you're telling, like, A friend or a family member, something deeply personal, some horrible thing has happened, and then you just start telling a story about something else and you're like, it's kind of in the middle of something here. You think we get through this? You know, big blife moment here.
- [99:32]
Leo Laporte
I'm looking at this anthropic ad. It's hysterical because it is a takeoff on the ChatGPT ads.
- [99:38]
Paul Thurrott
Yes, right.
- [99:39]
Leo Laporte
Because ChatGPT ads, they show some guy saying, how can I do a workout? And they chat. GPT writes a workout. And this is just all the sycophantic bs, right? You know, and here's the ad. Oh, that's great. This is going to be good. This will, I'll be very interested.
- [99:55]
Paul Thurrott
Look, anthropic is whatever it is, but they've done a nice job of positioning themselves in a world that is full of evil and terrible people and behaviors and so forth. And they're, I mean, they talk the talk. I, I'll give them credit for this. Like, I, I, their positioning is very good. This falls in line.
- [100:18]
Richard Campbell
So is their product a kinder, gentler, funnier AI? Is that what this is?
- [100:23]
Paul Thurrott
Yeah, yeah.
- [100:24]
Leo Laporte
Or unless.
- [100:27]
Paul Thurrott
Look, morning again in the chat.
- [100:29]
Leo Laporte
Yeah, exactly. But remember, Google was also do not do no evil until they did.
- [100:33]
Paul Thurrott
Well, until they weren't.
- [100:34]
Richard Campbell
Yeah.
- [100:35]
Paul Thurrott
You know, I mean, until they.
- [100:37]
Leo Laporte
The beauty of this whole thing is they're basically interchangeable. So this is, you know, you just move around and do whatever. And there's all these, there's all these Chinese ones and there's open weight ones. And really there's no, no, no need for loyalty here.
- [100:53]
Paul Thurrott
But that's why I think it's smarter than their part. So the, the loyalty to me, I think, is going to come from just usage. Like at some point, point you've, even though you maybe don't think of it this way, you've trained some AI to know you, to know what you expect, to talk to you the way you want to be talked to, to, you know, whatever it is. That may be where the stickiness occurs with AI.
- [101:13]
Leo Laporte
You know, I was thinking about that the other day, because I had done that.
- [101:17]
Paul Thurrott
Okay, but can you explain, you're going to tell me like there's like a JSON file you can export.
- [101:21]
Leo Laporte
It is a JSON file.
- [101:22]
Paul Thurrott
That's amazing.
- [101:22]
Leo Laporte
So the funny thing is there is standard. Claude calls it Claude md, but everybody else is agents md, and it's plain text, it's prompts, and it's completely transferable.
- [101:33]
Paul Thurrott
Let me tell you what I do. I Never want to see. In plain text is a detailed description of how messed up I am. Like, you just don't want to be confronted.
- [101:42]
Leo Laporte
It's not like that. It's more like Paul likes to use the EM dash and the word delve. So make sure you use that stuff like that.
- [101:51]
Paul Thurrott
But.
- [101:51]
Leo Laporte
But.
- [101:52]
Richard Campbell
And as many emojis as you can cram on a sentence.
- [101:55]
Paul Thurrott
Right.
- [101:55]
Leo Laporte
I just. We were just talking about this in the discord. I just pushed my. I had been, you know, refining the rules that I give Claude and the. And the instructions, and I just pushed him to GitHub because I realized I could download that into any other.
- [102:10]
Paul Thurrott
Okay, well, there you go.
- [102:11]
Leo Laporte
They all read the same file format. It's all marked down.
- [102:14]
Paul Thurrott
Yep.
- [102:15]
Richard Campbell
Right.
- [102:15]
Leo Laporte
Special.
- [102:16]
Paul Thurrott
I disagree.
- [102:17]
Leo Laporte
Markdown.
- [102:17]
Paul Thurrott
It's incredibly special. But okay. No, it's human. Human machinery.
- [102:23]
Leo Laporte
That's the mistake these guys made. It's not sticky at all.
- [102:25]
Paul Thurrott
But it was. They knew they were doing it right. This was like, what's more important, the stickiness and we may not win. Or we jam this thing forward at full speed at all. Damn the torpedoes and get this through before we can get regulated. And then we'll see where the chips fall. Like, this was their decision. Like they.
- [102:44]
Leo Laporte
I think so. The horse has left the barn.
- [102:46]
Paul Thurrott
There's no.
- [102:47]
Leo Laporte
Because of China. Because these models from France.
- [102:50]
Paul Thurrott
The horse turned around and burned down the barn.
- [102:52]
Leo Laporte
It's not even store. What's that?
- [102:55]
Paul Thurrott
Yeah.
- [102:56]
Leo Laporte
So I. I think it's out. It's done. I don't. I don't see any way to control this at this.
- [103:01]
Paul Thurrott
This. And that fascinates me because this is. I don't. Maybe someone could prove me wrong or just maybe it knows. An example I'm not thinking of, but like the fact that these companies, which would in any other circumstance be bitterly competing with each other, promoting your own standards. Imagine the Microsoft Bill Gates era, embrace and extend version of this. It would be completely different. But no, these companies who all can't stand each other are all working together, making standards. They're all doing it.
- [103:30]
Leo Laporte
It's unbelievable to some degree. Maybe I'm being a little Pollyanna here. They are a little more altruistic. I think that the people who are working on this stuff think they're changing the world. They think that we're entering a new era and they want to be part of that, actually.
- [103:46]
Paul Thurrott
So I agree with that and I think you're right. But this to me is still the Pavan Davalori thing. At Microsoft, there's still a higher par. You're answering to. So look, if you're OpenAI. No, even if actually OpenAI is the freaking most evil company on the planet. So they have this public stance where they're like, oh, saving the world, whatever. Okay. And then all he does is do hundreds of billions of dollars of deals every day of his life. And that's what he's really all about. You know, if you're Google or Microsoft or Amazon or whatever company, there's the financial part of it, there's whatever your position is in the marketplace and yeah, there are the scientists who all came out of DeepMind or wherever that have that altruism. Exactly. But at some point, just like the analysts are now looking at Amy a little more closely. Amy's going to look a little more closely, those guys. And that's, that's the problem. You know, that's why Anthropic is kind of interesting. I mean they're, they're, they're like medium tech, right? This small tech. There's like open source and openweight models and all this stuff and then there's like, you know, the big stuff. They're like in the middle. Yeah, they're in the middle. We don't really have a term for that. But they're.
- [104:52]
Leo Laporte
I'm throwing my money at them.
- [104:55]
Paul Thurrott
Well, I mean I want them to.
- [104:56]
Leo Laporte
Make it because they're competing against companies like Meta and Google which have an Apple and Microsoft which have funding from other sources.
- [105:05]
Paul Thurrott
The way to say this would be, you know, that Google, Microsoft, whatever, they're going to insuretify these things. Absolutely. The business.
- [105:13]
Leo Laporte
They have to.
- [105:14]
Paul Thurrott
The hope for an anthropic or the smaller companies is that they will not. Right. That they will be whatever the size they are and that your money. Sorry.
- [105:23]
Richard Campbell
They have investors too.
- [105:24]
Paul Thurrott
I know they do.
- [105:25]
Richard Campbell
This investor's gonna.
- [105:27]
Paul Thurrott
This is why it's the hope. Right? It's only a hope. I would equate anthropic to a company like notion. Right. Not because they're the same size necessarily financially, I have no idea. But because they're in this middle ground between like little goofy free tools and then super professional Microsoft stuff. And there, there have been at least three times now where it's like, okay, this is when they're going to start making me pay for this. I don't understand how they don't. And then they don't. And it's like, okay, so they've kind of held it together somehow. Even though they also have rounds of investment and they have investors and they, I guess people they're beholden to, to some degree, but they still care about their own customers, which to me is a central part of this equation, which we've lost. Like almost everywhere else in this industry.
- [106:16]
Leo Laporte
There is a big opportunity right now for companies like Microsoft that have enterprise trust. Trust enterprises are looking at this clawbot, this claw code bot thing and saying we would like that, but.
- [106:30]
Paul Thurrott
It'S way.
- [106:31]
Leo Laporte
Too unsafe for us to even contact.
- [106:35]
Paul Thurrott
Future is what, like reselling anthropic tokens or something?
- [106:40]
Leo Laporte
I think if they came up with an enterprise secure way of doing something similar, I don't know if that's possible, but I think that's an opportunity for enterprise.
- [106:49]
Paul Thurrott
Well, even that thing I just mentioned, whatever it was called, not mcpm, what was the Microsoft thing called? PCM Publisher, Content Marketplace. Not a great example. But Microsoft approaches. Microsoft's all about infrastructure, literally how much scaffolding we throw on this thing. So they're always going to do that formal kind of thing and that will be what the Fortune 500 wants. There's no doubt about it. Like, and hopefully for them they will still retain their control of that part of the market and then that will be fine.
- [107:24]
Leo Laporte
You know what's great is we're in the very wild west era here. Oh yeah, right, yeah.
- [107:33]
Paul Thurrott
And time is moving fast, which is also just freaking weird.
- [107:38]
Leo Laporte
Darren's pointing out that Anthropic has made. Yeah, everyone has with aws, right. But they're still commercial model. The only commercial models built into aws.
- [107:47]
Paul Thurrott
Epic Games has done a deal with Google and those are not the same size company either. So I mean, look, they're big compared to my business, but they're not big compared to Amazon or. Yeah, Amazon, Microsoft, Google, I mean they're just, they're in the middle. That's, that was the whole feeling. It's not that they're, they're not like a hippie commune with flowers and, and you know, free toys for everybody, but they're, you know, they're a business. But. Well, are they. By the technical.
- [108:11]
Leo Laporte
To me, what I think I don't know is going to be very interesting is these open weight models are getting better and better. They're only at this point a few months behind. So that's a big opportunity. I mean if, if these guys go rogue, if Anthropic goes rogue, people will move to open weight models.
- [108:30]
Paul Thurrott
This is not a prediction, this is a fact. They will go rogue. That company is so messed up.
- [108:35]
Leo Laporte
They have to.
- [108:37]
Paul Thurrott
Yeah, that was one of the things that you might know what this is in my feed. I have a. It's a site that like publishes emails between tech companies that came out in court filings. And there was one. There was the emails between Microsoft and Sam Altman when Sam Altman got fired from OpenAI. This is fascinating reading. And they said this publicly eventually. But there was a plan that Sam Altman and a bunch of people from OpenAI were going to come and start what we now call Microsoft AI. It was going to be a wholly owned subsidiary of Microsoft. They were just going to take them all, just bring them over. And what they wanted was to get back into OpenAI and make that happen again. They were like, look, if that doesn't work, then we will do this. But just watching or reading Kevin Scott, Satya, Nadella, Amy Hood and some other executives just try to understand what the heck just happened. Because there was no warning whatsoever what happened. It just came out of nowhere. That company is volatile. It's really messed up.
- [109:45]
Leo Laporte
We are going to talk. If you like AI. We're going to talk AI, of course, in an hour. With intelligent machines. And our guest Steve Yegi created a really. Actually, it's not an hour, it's 45 minutes created. So we got to move along here. Created an amazing tool.
- [109:56]
Paul Thurrott
I was just thinking about this. Yeah.
- [109:58]
Leo Laporte
For Claude called Gastown. And we'll talk to Steve about Gastown in about 45 minutes.
- [110:05]
Paul Thurrott
Why do they love fossil fuels so much? That would be the first thing I would ask industry expert Paul Theron Yangi.
- [110:13]
Richard Campbell
Also did a book with Jean Kim on vibe coding.
- [110:16]
Leo Laporte
Yeah, he's a great writer. I really enjoy his style. And the other thing we're going to be watching, it could happen any minute now. The next model, right. Anthropic Do Sonic.
- [110:27]
Paul Thurrott
That's right. Sonic. What is it? Five.
- [110:29]
Leo Laporte
Five.
- [110:30]
Paul Thurrott
Two, five. Just five.
- [110:31]
Leo Laporte
So we're at Opus 45, which was a massive step forward. That's not what I'm showing. But anyway, yeah, that's was a massive.
- [110:38]
Paul Thurrott
Step forward on Leo's side blog, which is called anthropicfanboy.com you know, this is like. He's like, oh, sorry, I am. I didn't mean to show you that I got clawed. Pilled.
- [110:53]
Leo Laporte
But no. November 24, 2025, Paul is the day that Opus 4:5 came out and changed my life. And we might be looking back sometime.
- [111:05]
Paul Thurrott
You're like giving a testimonial a super church now.
- [111:07]
Leo Laporte
You're like, I have seen the light.
- [111:09]
Paul Thurrott
You're speaking.
- [111:10]
Leo Laporte
Raise the Claude.
- [111:11]
Paul Thurrott
You just like full body immersion baptism over Here.
- [111:14]
Leo Laporte
No, I'm a self aware Clodbot.
- [111:17]
Paul Thurrott
Yep. Yeah, there you go. There you go. Okay, well, anyway, let me. Yeah, we're getting tight for time. I'll kill me. Let me just blow through Xbox and games. I guess I'm going to leave out the commentary, but we will talk about this.
- [111:33]
Leo Laporte
You did. You should mention though, the Firefox has added an AI kill switch.
- [111:37]
Richard Campbell
Yeah.
- [111:37]
Paul Thurrott
So the next version of Firefly, they've talked about this, but it's the next version. So whenever that comes out next week or two, we'll have that kill switch. Vivaldi is doing everything they can to kind of remind everyone that they hate AI. And they released a new version of their browser, has no AI in it. Or as they called it, we're extending the middle finger to AI, which I think is funny. Okay, so AMD is part of their conference call. Talk about like misdirection, right? It's like, you know, you're disappointing investors. Is there something I could throw out that maybe people would think would be interesting and maybe stop asking me these stupid hard questions about money? And that thing is the next Xbox console powered by a custom AMD silicon will appear as soon as the end of 2027.
- [112:20]
Richard Campbell
She said, wow.
- [112:24]
Paul Thurrott
Now this is. I'm going to get this wrong. I think it's RDNA 5 or it's basically the same silicon generation that was their AI 300400 series PC processors. Right. So these have what AMD calls APUs, which are essentially integrated GPUs, but are great. And you know, AMD is the heart of the PS5 today. It's the heart of the Xbox series X and S today. This is the kind of custom silicon thing that they do. They were supposed to be in the original Xbox, by the way, but intel swooped in and stole it out from under them because that's what intel does. But anyway, there's a whole kind of thing to that. I wrote a commentary about what I perceive to be the future of Xbox, like where it's going. But I'm going to hold off on that because it's just too big of a conversation. I don't want to kill any more time here. We did get. However, it's February 4th as we say this as we talk. So it's a new month. We got a new set of game pass titles coming across the various platforms. Some good stuff this month, by the way, Avowed is there. Madden NFL 26, Final Fantasy 2. That's about it from the stuff, I guess I sort of Recognize how high in life too. Some good stuff. There's a bunch of stuff, so that's good. Ea, I didn't put this in earnings because it's kind of a video game story, but EA 1.9 billion in revenue is not a huge jump, honestly, year over year. But the big thing for them was that Battlefield 6 is allegedly the best selling shooter of 2025, beating Call of Duty for the first time ever.
- [114:02]
Richard Campbell
And it's probably the last report we get from ea because they're going to be taken private.
- [114:06]
Paul Thurrott
Yeah, right. That's a good point, actually. Well, Saudi Arabia is happy, so that's there. And then Epic Games announced but did not release that they're working on a new version of their. It's basically like their launcher app for PC. Like their. It's like their store plus how you launch their, you know, the games, you get through them, et cetera, et cetera. I think all of these things are terrible. I've been gaming on PC now for years. All of a sudden again, which is weird. But Steam, the EA launcher, the worst Epic games. I hate all these things. I hate them so much. Like, here's what I want. I want to install the game. I don't mind. I do, sort of, but I' I accept that I have to do that from your launcher. I don't need that thing to auto launch every time I boot my computer. And I certainly don't want it running just because I want to play a game, you know, So I don't like that kind of stuff. But they're promising to Epic that is. Is promising to improve this app, I guess. And there's a lot of. They had a lot of data around how much money, you know, they give back to developers or not give back, but pay to developers, I guess. 6,000 games in the store. 1.16 billion on digital purchases from customers, up 6%. They're doing good. 317 million total PC players. Wow. I didn't mention this, but a significant chunk of EA's revenues actually come from Mobile. It might be as much as a third. I don't know if I don't see it here, but I feel like they could. Maybe, indeed, maybe I just don't see it. But I feel like a significant chunk of Epic's revenues now come from Mobile too. Right. Because of Fortnite, but I don't know. And then Nintendo released earnings, which is always fun because it's the yen and Jesus, it's like hard enough to do math. I have to do cross currency math. And it's like. But anyhow, their top line was net income of a billion dollars on revenues of 5.2 billion in the quarter. These are 24%, 86% gains year over year. But again, prior comparables are poor because that was the end of the life cycle of the previous console. But the big milestone this quarter for them was that the original Switch now has sold 155 plus million units, meaning it is now finally their best selling video game console of all. Right. Surpassing the DS, finally. Yeah, good stuff. And Switch 2 has now sold 17.37 million units through the end of the year. I don't remember exactly what it was in the quarter, but it was up quarter over quarter. And this is the fastest selling console they've ever made. So it's dramatically faster than the original Switch. But the worry here is that this is going to be like a movie release where it goes really good in the beginning and maybe drops off the face of the earth later. So we'll see what happens there. But there are some concerns that maybe this won't. I don't think this is going to have the long tail, I mean, maybe of the original Switch, but.
- [117:10]
Richard Campbell
Yeah, it's hard to know.
- [117:11]
Paul Thurrott
It's impossible.
- [117:12]
Richard Campbell
All depends on titles, right? The right titles start coming out for only Switch two. Right? Yeah.
- [117:17]
Paul Thurrott
And this is, you know, it's bad enough, like I look at the list of games on Game Pass. Right? We just talked about this. So some of these things, it's like Paw Patrol, Rescue Wheels. You're like, oh, okay. Blaz Blue, Entropy. Nope, got nothing. Star Sand Island. I don't know what half the stuff is, right. But then I look at. Right, but you look at Nintendo's game like, what, what sold great on Nintendo, right? They're.
- [117:41]
Richard Campbell
They're Mario. Yeah.
- [117:43]
Paul Thurrott
What I would call like familiar names, but it's like Mario Kart World. 14 million units. Nice. Pokemon Legends Z to A what? 8.41 million units. Donkey Kong Bonanza. I'm sorry, what are we doing? Are we just mashing words together now? Like, I don't even. I don't know what these things are.
- [118:01]
Richard Campbell
But I'm not sell. Donkey Kong again.
- [118:04]
Paul Thurrott
Yay. Yeah, Donkey Kong was my first. I think it was everyone's probably first exposure to Nintendo, right? Donkey Kong and its appearance on the Colecovision. So there you go. All right, I'll sell. Spare you my commentary. At least for a week anyway.
- [118:25]
Leo Laporte
Well, well, you know, you could do a separate show. Paul's commentary.
- [118:30]
Paul Thurrott
Paul scrums this grinds My gears.
- [118:33]
Leo Laporte
If we didn't have a PowerPoint presentation coming up on Whiskey, it would be.
- [118:39]
Paul Thurrott
I had to make a PowerPoint presentation for hands on Windows for the first time. And I was like, I am so sorry. I'm so sorry. What's like password managers is hard. Like, this is a lot of information. Like, I just, you know. Anyway, there you go.
- [118:53]
Leo Laporte
We. I will, I will. Mercifully, yeah, skip the club plug and just say, look, join Club Twit. Because without it, this dog gets it like this. Yeah, that's right. Twit tv, Club Twit Ad, free versions of all the shows and a lot of benefits. And we've got an AI user group for the club coming up on Friday. It's going to be a lot of fun. Twit tv Club Twit. Now, back of the book. Time for our Back of the book. We begin with tips of the week.
- [119:22]
Paul Thurrott
Make this one quick. I mentioned OneDrive and the positive changes I'm seeing. I told you that you can stop this thing from ever happening if you're lucky and you time it correctly. And I'm going to tell you how to do that.
- [119:32]
Leo Laporte
You can do it just at the right moment.
- [119:34]
Paul Thurrott
You literally have to do it exactly the way I'm about to describe. So you come back to the desktop. Sorry, you come to the desktop. It's the first time a new computer, you reset the computer and it's doing stuff. It's not always obvious, but every once in a while you get little pop ups and things. But if you watch the corner of the screen, you will eventually see the OneDrive icon appear in the tray. When it first appears, it has a line through it and that line does not necessarily mean. Although it sort of means that you're not signed into it yet because that will pass through automatically. What it means is it's updating, so you have to let it sit. Do not click it now, wait, it will disappear and then it will come back and it will still have a line through it and then it won't. And once that line goes away, click it, go to Settings, go to Manage Backups and that yellow box will be there. If you don't do exactly what I just said, it will not be there. I've never made it happen otherwise. The turning point for me was I mentioned I have eight computers that I've been doing this with. And Richard actually is funny because he said this. He was correct. For the first time, I reset a computer and then I just reset it again because I didn't see what I wanted to see. And then I realized I'd made a mistake. And that was the moment where I was like, oh, so now I've been able to do it consistently. And that's how you get that to work. So if you're bringing up a new computer, you don't want folder backup. That's how you make that work. You can reverse it afterwards, but then you have to worry about where files are. Okay. Okay. App pick is Bit Warden. There are only two.
- [121:11]
Leo Laporte
Our sponsor, Bit Warden.
- [121:12]
Paul Thurrott
Oh, there you go. Okay. That's not why they're. That's not why I mentioned it, but.
- [121:18]
Leo Laporte
I didn't know it.
- [121:18]
Paul Thurrott
Frankly, I didn't know that.
- [121:19]
Richard Campbell
Shocked.
- [121:20]
Paul Thurrott
I don't pay any attention. So it's what. I laugh, but that's true. I look at my wife sometimes and she talks and I can see her mouth moving, and I'm like, apples, bananas. I don't like. I don't even know what's happening.
- [121:34]
Leo Laporte
Lisa goes. Does the. The thing from the Simpsons.
- [121:38]
Paul Thurrott
Yeah, exactly. The teacher or the teacher from Charlie Brown. Yeah, yeah, exactly.
- [121:46]
Leo Laporte
I see your lips moving, but I don't know what you're saying.
- [121:48]
Paul Thurrott
Yeah. Do you hear the words coming out of my mouth? No, I do not. Or do you understand the word. Whatever the line is. Anyway. All right, so in looking at password managers, I use Proton Pass, and I do recommend it, but I strongly recommend a third party pass through manager, whichever one you choose.
- [122:06]
Leo Laporte
Yes.
- [122:07]
Paul Thurrott
There is only one viable option in the free tier to pass Proton Pass, and that's Bit Warden. They did just raise their prices, by the way, like double their prices. But their prices are so cheap. It's still stupid. Like, it's still 10 bucks a year. I know. A year. So, like, yeah.
- [122:24]
Leo Laporte
Less than a buck. Less than a buck.
- [122:26]
Paul Thurrott
Leo don't exactly rate. It's 1980 a year. But anyway, no, it's. I would say Bitwarden is a little more technical in use and in UI and stuff, and maybe the type of product I think a lot of people listening to this podcast would be into. But those two, to me, are like head and shoulders above all the rest. I don't know why.
- [122:46]
Leo Laporte
When they first came on a couple of years ago as an advertiser, I said, now it's free. But remember our old sponsor where they did a rug pull on the free version?
- [122:54]
Paul Thurrott
You're talking about, was that last pass? Yeah, yeah.
- [122:57]
Leo Laporte
We don't say that word.
- [122:58]
Paul Thurrott
I'm sorry.
- [122:59]
Leo Laporte
Flight Society.
- [123:00]
Paul Thurrott
The. The L word.
- [123:01]
Leo Laporte
The L word. But I said, you know, that really was A problem. And he said, no, no, Leo, even if we wanted to, we couldn't because we're open source. People would just fork the project and say, now it's free again.
- [123:13]
Paul Thurrott
There you go.
- [123:14]
Leo Laporte
So because it's. That's your protection on this. It's open source.
- [123:17]
Richard Campbell
Right.
- [123:18]
Paul Thurrott
So, you know, 1Password has a big audience for some reason. I actually think that app is really quirky and weird, but. But One Pass and like, Dashlane, they're great too, but they don't really have a free tier, per se. So the nice thing about Bitwarden or Proton Pass is you could just use it for free and make sure this is what you want, and then if you see the value and whatever you get extra for the paid, you can go for it. And in Bitwarden's case, once you get into the paid tier now, you're competing with this bigger group of solutions, and it's cheaper than all the rest as well. So it's still cheaper even, you know, even with, like, doubling their price.
- [123:54]
Leo Laporte
Like, they're pretty amazing.
- [123:55]
Paul Thurrott
Yeah. It's still the cheapest.
- [123:56]
Leo Laporte
Yeah. The premium is, I think, more to support them, frankly.
- [124:00]
Paul Thurrott
Yeah, exactly. That's why. Yeah. When I was using Bit one, I did the same. I'd be like, I'm just gonna pay for this because I use it. Like, why wouldn't I support this company?
- [124:07]
Richard Campbell
Yeah. And I like. I like the family version too. Right. Like, the she must be a baby is also using it. We have shared accounts and stuff. You got to pay for that.
- [124:15]
Leo Laporte
It's worth everybody.
- [124:16]
Paul Thurrott
Exactly right.
- [124:17]
Leo Laporte
I can't get Lisa to stop using LastPass. I keep saying.
- [124:19]
Paul Thurrott
I keep threatening my. I keep telling my wife, like, we're getting you off of this thing. Like I'm, you know.
- [124:27]
Leo Laporte
That'S all she hears.
- [124:28]
Paul Thurrott
That's what she hears. Exactly. It definitely goes both ways. She's like, that's funny.
- [124:34]
Leo Laporte
Run as radio. Coming up, Mr. Richard Campbell, what do you got on the docket?
- [124:41]
Richard Campbell
Came out today, My friend Erica Tolle, who's back on the show. She's joined Microsoft for the past couple of years, and she's been now moved over to the Purview group. So we did this getting started with Microsoft Purview. Purview is this umbrella product. It sits over top of a bunch of stuff that already existed, like information rights management, data loss prevention, things like that. But it also does a lot of structured data governance, and it's a complicated tool. It just has a lot of things about taking care of. Of data, and it's sort of your key product if you want to use M365 copilot in your organization. Because before you do that, you have to, quote, unquote, get your data stayed in order. And that's impossible. But Purview will actually help you to go further down that path so you have more confidence what's going to happen. The other thing that Erica dug into is as you start having M365 copilot in your organization, Purview gives you a view of what people are doing with it, what data they're accessing. So you have at least an opportunity to say, hey, we didn't put these archives away properly, or, you know, we're poking into data we probably shouldn't and you can then correct before it becomes too big of a problem. So it was a great early in the year show for, hey, if you haven't already gotten into Purview and you're trying to get data in order, this is the direction you want to go in. So solid conversation, well worth your time.
- [126:04]
Leo Laporte
Purview is an excellent name, by the way, for a software package, I think.
- [126:08]
Richard Campbell
Yeah, I know. I think they did a great job.
- [126:10]
Paul Thurrott
Yeah.
- [126:10]
Leo Laporte
All right, I have the slideshow all queued up.
- [126:14]
Richard Campbell
Okay. Don't need to throw up a slide just yet. You can just hit the link from the Glendronach. So this weekend, between being at NDC London and being here in Svetog, I got the weekend to go hang with my buddy David up in Glasgow. And then we went for a drive early on Saturday morning, bright and early, although it was actually dark and rainy because it's January in Scotland, like what you think is going to happen. And we headed towards Aberdeen. So this is in the far east part of Scotland. Driving northeast out of, out of Glasgow, we actually stopped off in a little town called Stonehaven for, for a coffee, where they were 40 foot plus waves from the North Sea smashing into the breakwater enough that they'd actually closed off the gates in the harbor and it was banging away there too. But after we left Stonehaven, it was very Scottish. It was beautiful, but also terrible. As we left Stonehaven, we actually veered away from Aberdeen and went up the A96 into an area called Aberdeenshire, which has got Aberdeen and everything else to forgue, which is a valley, which is where the Glendronach distillery is now. The location was originally known as Boynes Mill. And back in 1771, a man by the name of Jane James Alarts built a house, the Glen House, these days known as the Boyne's Mill estate. And after a few years he was the house builder there. He actually acquired most of the farmland in the area by 1775. And then things were clearly happening. But until the Excise act of 1823, we've mentioned this before, nobody really talked about things much. But in 1826, in a partnership with a bunch of additional farmers in that area, James Ellarce founded Glendronach. And he was only the second person, the second company to apply for a license and oddly enough, very experienced at making whiskey almost right away. So the name Glendronic comes from the Gaelic words glen being valley. And dronach means a bramble, which really is about blackberries. So this is the valley of the berries, all of it. Of course, at that time it was all local barley because it was just a local barley farmers just getting their excess product going. And they interestingly that early on, in the early, you know, 1820s, went directly to sherry casking. So Glendronic has been known as a sherry casker since the very, very beginning. They did all right. You know, they got. He had a lot of relationships going all the way down into London and certainly in Edinburgh. But in 1837 there was an accident that burned the entire facility down. And of course they tried to rebuild right away, but many of the other farmers weren't too interested about spending more money on it. James borrowed everything he could and by 1842 runs out of money and is bankrupted. But in the bankruptcy, they protect the house he built, the Boy's Mill house. And so he lived out the last of his days there. He passed away in 1853. That house is still standing today. It's currently undergoing restoration and we didn't get to go in it, but we did see it. It's going to be for parties and events and things like that. It's very amazing to see. Look over at a house. It's 250 years old. But before he passed away, the distillery site was bought by Walter Scott. He used to run to niche and he sort of turned. He got the. Got their place back up and running again not long before Alaris passed away and was very successful. Ten years after getting involved by 1862, recorded as the largest duty paying distillery in all the Highlands. So very successful distillery in his early days. When Scott passes away, it's sold off to the Leaf Partnership. That's Duran Somerville Co. Who operated through the turn of the century and in fact only get into trouble when the shutdown happens during World War I and they actually run out of money and are forced into receivership and the government takes control of the distillery after the war is over. In 1920, Charles Grant, and that is the youngest son of William Grant, the guy who founded Glenfiddick and Belvini, buys it and then a few years forms the Glendronic Distillery Company and operates it for 40 years very profitably, successfully, mostly in blends as is usual. And one of the biggest blends that they were contributing to even before Grant owned did was Teachers. So Teachers Highland Cream. And so in, in 1960 the William Cheechers and Son group actually buys the distilleria all out again continue to do blends with it and in 66 does a big expansion, goes up to four stills. At that time they were very traditional. 1960s they were still doing floor maltings. They used Oregon pine wash backs, heat fired drying kilns. So there's peaty whiskey in the highlands and coal fired stills. And so they did still that time they made single malts, all matured in sherry casks. But often there were lots going into Teachers highly cream and several other blends which we don't really need to get into. Teachers actually acquired by allied breweries in 1976 and Allied Breweries continues operating distillery quite successfully. In 1991 the Master Distiller the time did something very unusual then, but common today, excuse me, where he builds two 12 year olds expressions of the whiskey, one age to bourbon casks and one age to sherry casks. But it's not enough. And in 1990, in 1996 Allied shuts down the distillery. They mothball it for six years and when they came back up in 2002 they end the floor malting. So you start buying malt like everybody else does. The distillery sold again to Pernod Ricard who finally retires the direct coal firing. And of course in 2005 you're still using coal and now you're in the EU so it's kind of illegal, a lot of emissions. So they finally switched to Steam. In 2008 it sold to Ben Reaccur which is part of a collective group which I'll talk about in a second. And they make their core range a 12 year old, a 15 year old, an 18 year old, very successful. And within seven, eight years it's sold to Brown Fornum, that's Jack Daniels if you keep track and actually buys three distilleries. Ben React also owns a bunch of other brands, the Glendronic and Glenn Glassaw as well. And there was a, there was a controversy in 2021 after Brown foreman bought it because the bottles of, of Glendronic at the time all said not chill filtered on the bottom of the bottle. And in 21 they took it off. And so every people, they, I've actually read articles about this. They call it the McAllenization of, of Glenn Tronach, because in many ways, Glendronick is what Macallan used to be. It was a little distillery that did cherry caskings, no chill filtration. It turns out none of this was actually true. They took off the label of no chill filtration because they were finally complying with the Scott Scotch Whiskey association standards. They were never a member of the, of the swa, so they didn't really have to follow the rules. And one of the rules was if you do chill filtration, you can't put no chill filtration in the bottle. The question is, was Glendronic really doing chill filtration? The answer is no, but sort of. They did do filtration, but they did it batch by batch. And it wasn't necessarily chill filtration, it was just filtration. So if they found there was a fair bit of particulate or flocculation in a given batch, they would run it through a filter to get a little clearer and then they'd add it into the main batch again. They always did that. But when they weren't part of the swa, they just said no chill filtration because they weren't doing standard non chill filtration on it. And yet people are complaining since the label changed, that the taste of the whiskey changed. And that's probably true, actually, because one of the side effects of being closed for six years in the 90s was that they had a lot of barrels aging a lot. And so just because they were making a 12, 15 and 18 doesn't mean there's only 12, 15 and 18 in there. They're often putting much older barrels on it, making a much riskier, richer whiskey. And that has a lot to do with the master distillers. And that'll be the next part that we get into. And so this year, 2026, if you're doing the math, is actually the 200th anniversary of Glendronic. So we're just seeing them after a major refit scaling out. They're. They're currently do about 1.8 million liters annually that they are getting, getting ready to double production. They're adding up more facilities to that. They use Lauret barley, which is a high, low Nitrogen, high starch barley. They run in 28 ton lots across four bins. Up until last year, they used a bobby mill that was bought in 1913. Remember when we talked about milling? That bill was from the 1850s and they bought it used in 1913, it was already 70 years old for £5 and used it until 2025. And they only retired it not because it was worn out, because bobby mills never wear out, it was because it only could process three and a half half tons that it go. And they were trying to increase lot size. So they now switched over to a modern German Bueller mill, which is the guys who do all the beer stuff. And also where a lot of distillers get their gear from. Fully automated runs, twice as much, six and a half ton capacity. 14 wooden boshbacks made of Douglas fir. They replace the old Oregon pine ones and they do about a 60 hour ferment. And they have two pairs of stills. And now we can get into the stuff slide deck of the tour. Because I did take this tour and I've taken a set of pictures, sort of show you what the experience of walking around what is a very traditional distillery. And that first picture there is that building from 1967.
- [136:23]
Leo Laporte
Well, we have to start the slideshow with this fabulous first, first slide provided by Joe Esposito.
- [136:33]
Richard Campbell
Joe.
- [136:36]
Leo Laporte
And here we go. Sorry, here's, here's the, here's the distillery.
- [136:41]
Paul Thurrott
Yeah.
- [136:42]
Richard Campbell
So, yeah, you were looking at the still house. So this was the building built in 1967. And there's four.
- [136:49]
Leo Laporte
I didn't give you a clicker, but you could just. Richard, if you just hiccup when you want me to go to the next slide.
- [136:54]
Richard Campbell
Nice.
- [136:55]
Leo Laporte
I can do that.
- [136:56]
Richard Campbell
And so now let's go inside. Let's go inside the building and I'll show you the first thing I thought was very controversial, which is look at the lie arm. This is one of the wash stills. Now how do you know it's a wash still? See the glass windows on it? In your initial, your first round of distillation, right, you're taking the wort, you're putting it into that still and you heat it up, it'll foam. And so the windows are for watching, for foam and you can actually dial down the heat because you don't want to foam up to above the noise neck. It'll taint the whole load. And so that's why you know it's a wash still. But that lie arm is very unusual. Typically those lie arms are straight, but they either are Tipped down or tipped up. This is what they call a saxophone line arm. And it's almost distinct to Glendronach. And the reason for the line arm angles and so forth is reflux. We're trying to encourage the distillate to actually fall back into the pot to take more flavors out of, to smooth it out, make it lighter. But this reflux design, this lot curved linear, actually encourages less reflux. So it breaks with the initial run. This will go from 5 or 7% from the wort up to about 22% to carry a lot of oil with it. Now, if you move to the next picture, I'm looking down below that initial condenser to a secondary condenser because what they're trying to do now as it comes out of the still is cool it off as quickly as possible and get it into the intermediate spirit still before it goes into the actual spirit still. So double cooling coming off of that. It's just a distinct part of the design. Now, right beside it, you can see it right the next shot there, that's the intermediate spirit receiver. So everything comes out of that one wash still. That 22% stuff goes into the intermediate spirit receiver and allowed to cool before it gets pushed over to the actual spirit still.
- [138:54]
Paul Thurrott
And then.
- [138:54]
Richard Campbell
And the next shot is that spirit still and the spirit still. You see, it's right beside the. The wash still. And there are in pairs. But look at the difference in the lie arm. It's dead straight, goes straight across. And so it creates more reflux. There's more ability, ability for the alcohol to fall back into the still. It's a smaller still because they charge it with left, it only gets about 55 liters. They run that still for about five and a half hours. And in that time, the first 50 minutes or so is going to be heads stuff they're going to. They're going to take out, they're not going to use. And then the middle 90 minutes, about a thousand liters is going to be the hearts, the stuff they're going to want to put in the barrels. And then a bit another two and a half hours of tail. And at that point it's coming out of the still at around 69%. One of the things we talked about with this particular still is that it is over 40 years old and it has been repaired multiple times. So if we, if you zoomed in that picture, but you'd see there is some welds where they've replaced pieces of copper. The more heated and worn parts of the still so we got a good close look at that. So I didn't get a chance to actually look at the washbacks or any of those parts. We did spend time in the still house and, and see how the core spirit is made. But the next step there is the warehousing. And they have three original 200 year old Dunnage warehouses that have been flooded multiple times. And then we want, we actually got to go into the warehouse number four. And these particular doors are designed to resist flooding. The Dronek river runs right beside here and sometimes it goes over and it will flood these, these buildings. Remember these are dunnage warehouses. So they have dirt floors that help keep it cool. And in fact, if we go inside from here, one of the first pictures I took was alcohol fungus. All these buildings are blackened, looks like.
- [140:44]
Leo Laporte
I hate to say it.
- [140:46]
Paul Thurrott
Yeah.
- [140:47]
Richard Campbell
So this is a fungus that eats alcohol. And it's a normal thing you find in every distillery. Everywhere you go you'll see these black patches of black, even on trees. And it's because there's alcohol in the air and there are certain kinds of fungus that have evolved to consume the alcohol. There are a bunch of different areas inside. This Dunnish warehouse is very large. So the first area as we came in the door, if you look at the next picture is bourbon casks. So these are stacked three high wooden. And notice the floors are dirt and that's to maintain that moisture level so as it gets warmer, water naturally comes up of the soil and keeps the humidity up so you continue to lose alcohol. I got a close up picture of one of these in the next shot. And you'll notice these are all Jim Beam barrels. So the bourbon, the bourbon casts come from somewhere. In this case they're coming from Jim Beam. The blue paint on them is a visual way of indicating this is a second fill barrel. So when you use the first time they're called first fills, they've already been used by Jim Beam, so they've had bourbon in them. And then they will use them again in a second fill and after that they won't use them anymore. Moving further along down the plate, there was another area right beside the bourbon stacks where the sherry punts. These were Pedro Jimenez sherry puns. And they're 500 liters of much bigger barrels. They only stack too high because they're very heavy and they'll crush each other. So they only stack those two high. But even craziers beside that, that the next picture on are the ruby port casks. And these are don't stack at all. They're long and they will burst. And so they put them flat on the dirt with nothing on top of them. No racking at all because they do port castings as well. So that's my set of photos if you wanted my experience of touring through there.
- [142:34]
Leo Laporte
Nice, very nice.
- [142:35]
Richard Campbell
They have actually had. Yeah, they have actually had trouble with flooding. And so they also have additional rack houses in other parts of the property higher up so they can manage floods better. Let me tell the last bit of the story here, which is a story of two master distillers because it actually affects the line and the alcohol that we tried. So the first master still is a guy named Billy Walker. And he got his degree in chemistry from the University of Glasgow in 67. So not a young man started to hear him. Walker working on Ballantine's in 72. He's also been in Inver House and Burns Stewart's distiller distillers. In 2004 he got a bunch of partners together to form the Benriac Distillery Company with the Benriac Distillery. And four years later in 2008 they convinced Pernod Ricard to sell them Glendronic away from the Pernod Ricard collection. And in 2413 they also got Glenn Glasson. These are all relatively close to each other. Billy's whole shtick was reviving brands, making them stronger, growing them out. And of course they had a lot of of whiskey laid up. So they were. He made the 12, 15 and 18 lines in 2016. He sells the whole Benriac group, all three to Brown Ford and makes a big pile of money. And one of the ways we talk about doing that is because he was using up the old stock. So he made the whiskey as good as possible, which encouraged a higher price of sale and then immediately took that money and bought another distiller called Glenolachi not far away. And that's where he's focused right now. And so he's the one who calls it Glendronic with the D capitalized and makes the 12 year old which is made aged in Oloroso and Pedro Jimenez sherry casks and held it at 43%. The 15 year old is Oloroso and 80%. Pedro Jimenez so far more at 46% and their 18 is Olorosa only at 46%. These are all very good, comparable to Macallan, super drinkable. But when he goes over to Glenn Elachi, the Baron Fornum needs a new master distiller. And so they Tap Rachel Berry, Dr. Rachel Berry, she has a PhD in chemistry and she initially worked at the Scott Whiskey Research Institute, has also been at Glenmorangie Art Bag and Glenmore, became a master distiller in 2003. And in 2020 11, she was working for Morrison Beaumar, which is Beaumont Akintoshen and Glengarr. So she was brought into over in 2017, now responsible for three distilleries. Ben, react, Glenn Dronach and Glengassa. And Rachel Berry is a very special woman in this business. She's the very first woman to ever be inducted to the Whiskey hall of Fame. I've read a couple of articles about her where she's referred to as the first lady of Scotch. And so this is the first time she's been in charge of what to do with a distillery. You got to imagine Billy Walker was wildly successful, really turned Glenn Brownock around with his 12, 15 and 18. So what can she do to do something distinctive to sort of make her thing? And what she's done is a lineage called the Masters of Anthology. So she's kind of studied the kind of whiskey that's made at Glendronach and made her own versions. And she's made made three. One called Ode to the Valley, the next called Ode to the Embers, and the last and the one I have, Ode to the Dark. So Ode to the Valley, no age statements on any of these. They have a variety of ages. They're all very dark whiskies. But Ode to the Valley is aged in ruby port and Oloroso cast. You saw them in those pictures there. It's 46.2%. The Ode to the Embers is a peated highland whiskey aged in Oloroso and Pedro Jimenez casks. Then Ode to the Dark is an award winning, extremely difficult whiskey made because it's only Pedro Jimenez cas. And Pedro Jimenez as a sherry, is quite sweet. So sweet that often you use Olorosa to offset that so you don't end up with this crazy sweet whiskey from it. But out of the Dark's got it nailed. It's 50% and you wouldn't know it. It drinks absolutely flawlessly and it's a gorgeous whiskey. And it really has made a statement of what Rachel Barry can do as a master distiller. You can find this bottle in the US at a few specialty shops and it's about a mere $90, which is a bargain for a whiskey this nice. You know, some of the articles that I read around Glentronic talked about it being what Macallan used to be. That Macallan's become this giant industrial machine. And curiously, just by good fortune, the next tour I took that day was at Macallan and we'll do that next week.
- [147:17]
Leo Laporte
Nice. Thank you Mr. Richard Campbell. Runnersradio.com net rocks is also there with Carl Franklin. Paul Thurat's at therot.com and leanpub.com and they both join us every Wednesday, 11:00am Pacific. That would be 14:00 East Coast Time, 1900 UTC. For Windows Weekly, you can watch us live on Twitch, YouTube, Facebook, X.com and LinkedIn. You can also watch in the club if you're a club member. I hope you are if you are, thank you. After the fact, on demand versions of the show at Twitter, tv, WW and wherever you get your podcasts. Thank you gentlemen. Will be back next week. Thank you winners and dozers for Windows Weekly. Take care. New Year, New Me.
- [148:13]
Paul Thurrott
Cute, but how about New Year, New Money? With Experian, you can actually take control of your finances. Check your FICO score, find ways to save and get matched with credit card offers giving you time to power through those New Year's goals you know you're going to crush. Start the year off right. Download the Experian app based on FICO scoring model offers an approval not guaranteed. Eligibility requirements and terms apply subject to credit check, which may impact your credit scores. Offers not available in all states. See experian.com for details. Experian.