Sharp Tech with Ben Thompson - OpenAI Enters the Hardware Business, The Challenges and Opportunities for Jony Ive, Takeaways from Google I/O 2025

Episode Date: May 22, 2025

Ben and Andrew react to the news that OpenAI is acquiring Jony Ive's hardware startup for $6.5 billion worth of stock, including questions about the form factor of future AI devices, challenges inherent to manufacturing hardware in 2025, the logic of these ambitions for OpenAI, and yes, a few words about the 9-minute video announcing the deal. At the end: Google's plans for its search business, Veo 3 and gen AI videos, and Ben's appearance on the Bill Simmons Podcast this week.

Hello and welcome back to another episode of Sharp Tech. I'm Andrew Sharp and on the other line, Ben Thompson. Ben, how you doing? Cool, calm and collected, Andrew. I've gotten feedback that I, you know, not sure it's always productive to come out guns of blazing. So I'm just relaxed waiting for you to lead the conversation. Oh, wow. Okay.

Guns blazing. You've been guns blazing on Twitter for the last 96 hours. I feel like I'm talking to a celebrity right now. It's been all month. I've gotten viral like four times this month. I totally on accident. I don't know what happened. Apparently I've unlocked the code recently.

So yeah. Oh my God. I guess I'm back on board with the Twitter algorithm as of late. Actually, no, that's not true. Going viral stinks. It's not fun at all. Honestly, I would tweet more if I could tweet without having like a thousand likes and then

having people pop up in my mentions all day long because I also went viral. People hate this. No one wants to hear about, oh, the, the, the, the, how difficult it is to. to sort of be so popular on Twitter. Yes. Well, just to be clear for the audience, we're talking about Ben's alt account, no tech Ben,

which has like a combined 100,000 likes as you've been trolling half the NBA for the last four or five days. It's been great. But we'll talk NBA at the end of the podcast. Oh, 24,000 for my tweet yesterday. Geez. I looked at it.

I was like, I don't know what's, what Ben mentioned look like. This is the reality of going viral on Twitter is I was, I was, you know, there was kind of a group chat discussion going on about the fouling situation or not in the game yesterday. So I'm in the car going to, you know, I was going to go work out with my wife, you know, and I just pull up, I just dash off a tweet. Don't pay any attention to it. And then it's not until like even two hours later that it's already at like 4,000 likes.

I'm like, oh, geez, I wasn't expecting that. Well, and the other day you come on to record Sharp Tech and you're like, well, it's my burden to fight for Janus. I had no idea that you had woken up. You didn't even watch Game 7 of Nuggets Thunder and then immediately took a shot at Yonkins after that. It was perfect. So here we are. I hope you muted all of those tweets. I did. It's really important. You got to mute them as soon as possible. Yes. Well, speaking of news on the internet, we had some news break on Wednesday. And I'm going to read from Bloomberg, they write, OpenAI will acquire the AI device startup co-founded by Apple veteran Johnny Ive in a nearly $6.5 billion dollar all-stock deal, joining forces with the legendary designer

to make a push into hardware. The purchase, the largest in Open AIs history, will provide the company with a dedicated unit for developing AI-powered devices, acquiring the secretive startup, named I.O., in all lowercase, also will secure the services of IVE and other former Apple designers who were behind iconic products such as the iPhone. Quote, I have a growing sense that everything I've learned over the last 30 years has led me to this place and to this moment. I've said in a joint interview with OpenAI chief executive officer, Sam Altman,

it's a relationship and a way of working together that I think is going to yield products and products and products. So, Ben, there have been rumors surrounding this partnership for a good two years now. What do you think of the news that emerged on Wednesday? I mean, it's certainly a big deal. I mean, it's pretty interesting. I didn't know that this announcement, I think it's been reported that they're working together. Like, what's the line between rumor and like we, everyone kind of knows this to be true?

there have been drips and drabs for about a year and a half. Right. But one thing that has been a hang-up for me has been this concept of how do you do a partnership for building this product? An acquisition makes a lot more sense. This is now sort of an open AI company. There is, by the way, open AI is in this weird transition from a nonprofit to a for-profit with a nonprofit board still in control.

a good way to diminish the amount of stock that in the final transaction goes to the nonprofit is to be handing out stock willy-nilly for entities like WinSurf and for I.O. But both products, we talked about WinSurf last week, fit the general thesis of Open AI seeking to be the interface for AI. And, you know, it was totally by chance that I wrote this yesterday in the context of Google I.O. one of my takeaways, and I know we'll get to Google I.O. later, but it was overwhelming in many respects, all the stuff that they showed. And a lot of it's like, how are customers actually going to use this and get to this? Like there's sort of these fanciful demos that we speak positively of like, oh, AI is amazing if you take agency. And a lot of them are like, no one's going to actually do this. And one of my takeaways was actually this is reinforcing to me. why for consumer companies, the hardware layer is so important. You need a product that makes it easy and ties it all together. That's right. And what's very tangible, you go to the store, you buy this thing, this thing lets you do things.

The idea, like, and that's part of what makes ChatGPT pretty incredible, actually, is the fact for most consumers, or it started out as a website? It's a website. And then like an app, to build that way is actually, it's weird because it feels easier. because, hey, it's just an app, you know, right? It's just a website. It's just code. But in many respects, it's actually much more difficult than getting...

In 2025, it's unbelievable that there are this many people typing chat gpte.com into their browser and accessing it that way. Oh, that was another opening I deal. They bought chat.com ages ago. And then I think they realized, no, we got to stick with chat GPT. That is the brand. But if you type chat.com, you'll go to chat gpte.com. But the, yeah, so it makes, if this is going to be a consumer tech company, which I think it clearly is going to be, this makes sense in a certain dimension. What's interesting is this eternal tension between being a hardware company versus being a services company.

And I've talked about this for years and years in trajectory. again, to go back to Google where I think they aired, and I think Google itself realizes they aired, and again, we're repeating ourselves. I guess it's a good sign. I think we've been on the right path, but when they were focused on differentiating Android from the iPhone, and the reality is they also needed to serve iPhone customers. And so here's the question. Is this a case where is this a distraction?

They actually need to be a service that's on other devices. They have this partnership with Apple. Is that more in the direction of where they're going? And this is a sort of a signal of direction in a, no, we're going to be fully integrated. You're going to come to us for everything. Well, that's what I'm wondering. Are they not picking a direction here? Because if you step back, it sort of looks like they're trying to become Google and Apple in one company.

And I don't know whether that's a bad thing. I mean, I guess for now, as we all wait to see. what this technology turns into and how people are accessing it. Maybe it makes sense to keep all your options open. But I wonder whether there are drawbacks to this approach. Well, let's think about the hardware layer. It's always been the case that when you think about the hardware layer, there's like Apple over there and Apple does what they do and you're not going to compete with

them and you're not going to get their customers because they love Apple. And so it's like, what do you do outside of that? And you think about this in the context of like meta, right? Meta's sort of like, there's sort of an assumption Apple. is going to be there. But, you know, Mark Zuckerberg has said explicitly, we want to be the Android to Apple. And embedded in that is the assumption that Apple's going to have a headset, and it's going to be compelling. They're going to have their customers. And sure, Facebook will be on there. But realistically, there's also going to be an alternative to be a,

quote, unquote, open platform. And that's the opportunity that we're going to seize. If you're open AI, though, and you're sort of looking forward, setting, aside, this is sort of a statement in many respects that we know Google's going to be there. And I think Google I.O. was a good articulation of that. The fact of the matter is the reason why Google's always been such an interesting player when it comes to AI is the business model challenges are obvious, but equally obvious is their infrastructure is unmatched. They have the best team. You go back to the original Open AI. founding in those emails between Elon Musk and Sam Altman basically saying, look, Google is going to take this whole thing unless someone sort of steps up now. And you can definitely see a world in which Sam Altman is sitting there. Say what you will about Sam Altman. He is very good in terms of thinking in systems and structured thinking about what's going to happen in the future.

And looking forward and saying the opportunity is to be the apple of this space. they're not going to be anywhere. Google is going to be there. Do we want to compete with them head on? Or do we want to assume they're going to be in the market? Android's going to be deeply integrated with their models. We're just going to be an app on Android, just like meta complains about just being an app on iOS.

And if we want to fully compete and deliver an experience, and by the way, maybe we do think there's going to be significant cost to AI in a marginal basis. It's not, is it ever going to get to the cost structure of web services where you basically treat every user servicing them as free, even though the costs are astronomical, but that's how you operate. And actually, the opportunity is to be the integrated all-up player. Hardware winner.

Hardware winner. Right. Exactly. And this seems, you know, that's how I would be thinking about this. Yeah. And it's a good callback to those emails about Google eight years. ago when they were just starting out. And the other thing that amused me with this news on Wednesday, we've joked about this at various points over the last two years, but there's now a long-running

tradition of OpenAI timing its biggest announcements to upstage Google. And this appears to be- it literally, it literally being called I.O. The week of Google I-O. It's so good. It's so good across the board. Last year, I believe it was Open AI debuting voice mode. I mean, did they name it I-O like a long time ago just in anticipation of this week? I mean, it really is. It could be. It could be. They've been talking for a while,

according to the nine minute video I watched, which we could get to. Well, the other thing, the other thing about this is Johnny Ive is the headliner. And I can't remember if I said on this podcast, I definitely said it on dithering this. You go back to that interview Johnny Ive did with Patrick Collison a week or two ago.

A great interview, definitely worth watching. One of the all-time condemnations of sports analytics, without mentioning sports analytics, which I appreciated. But what came across is he's locked in. He's a live player. This wasn't an elder statesman sort of looking back at his career and reflecting on where they're at.

And probably the most interesting bit here, and it came across in this 10-minute video, which we will get to, was the real angst he felt about the smartphone. And this sense that I created this model. that I'm not sure it's good and I want to go in and fix things. And so that's the Johnny Ive angle. But what has perked up my ears and I think other Apple observers is it's one thing if it's Johnny I've rich beyond belief, Uber successful, the ultimate made man, dinking around in San Francisco making the king's crest and oh, now what would a hardware device look like? Yeah. I mean, I saw like a year or two back, he designed a $2,500 coat for Montclair. So that's sort of what I assumed he had been doing for the last several years. Yeah, I've been more of a kind of a goose man myself,

unless I go to Washington, D.C., but yes. So, just like fun side projects for a guy who's rich and has nothing left to prove. Right. No, exactly. But what has happened over the last couple years is the talent they are taking from Apple has been pretty extraordinary. You know, so, so not, uh, Evans Hanky is, is a very well, she's the one who succeeded Johnny and then she left a couple years later. And then also like the head of design for the iPhone. Like, so there's different, there's the actual like industrial design and like figuring out. And then there's the actual like design for manufacturing and then operations all these. Well, there's like this middle piece where you're, you're bringing those two.

parts together, but then they're also hiring operations people. So like this has been, and everything you hear is they know everyone at Apple. They know everyone that's good. And they have been running quite the operation for the last few months in particular, but over the last year or two, to basically say, who are the people at Apple that we know are excellent and we're going to go get them? And this is very much an Apple operation in that it is a, Apple people. Now, that could be a plus and a minus, right? It's people who've already succeeded, who maybe don't have the fire in the belly, you know, that comes from, you know, that's Johnny Ives, circa 1995. On the other hand, they're very good at what they do. And they know what they're

doing. This isn't a fly-by-night hardware operation picking up the scraps. They've gone into Apple and they have plucked the best people. And they are approaching this with incredible, what's the word I'm looking for? Like, they know what they're doing. Intent. Intent. Yeah, maybe that's the word.

And so it's going to be an interesting to see how this turns out. You can imagine, you know, people immediately are going like the humane pain or whatever, like some other former, you know, Apple people and saying, you know, are they going to be high on the smell of their own farts or something along those lines and think they know it all just because they did the iPhone and aren't going, you know, is this a world where you need the startup mentality and you need to be scrappy?

Yeah. The alternative is actually hardware is really hard. Well, I mean, that's the thing. They're talking about designing a family of products and the team right now, the team that Open AI is buying, is much smaller than the team that exists at Apple. So I assume they'll be building that out.

But it's a real challenge to do, even one product and make it compelling enough. And a family seems more ambitious, but I don't know what the timeline for any of that looks like. For anyone who's an outsider in tech and unclear on why this news is such a big deal, can you just give me a cliff notes on Johnny Ives' legacy at Apple? I'm actually familiar with Johnny Ive, but for anybody who's not, why is he such a legendary figure within tech?

Well, Johnny I was this industrial designer that actually started. at Apple before Steve Jobs came back. And then was incredibly disillusioned and ready to leave. And Jobs shows up as like, who is this guy? And then like basically elevates him to be, in many respects, his right hand man. Johnny Ive, you know, led the team that created the most seminal, most important consumer electronic devices in history that basically everyone has followed on. Like the iPod, the actually his first probably most famous product was the teardrop.

sort of iMacs, the colorful ones that that helped revive the product that really revived Apple, gave them the cashful they needed to get to something like the iPod. You have the, you know, the Mac books. And then obviously you have the iPhone, the iPad. And like what else you're going to say? Like the most famous and most impactful product designer in history. Nothing left to prove. Yeah, no, exactly. I've been fairly critical of I for the sort of the talent of tenure. I think 2010's design at Apple was pretty disappointing, particularly in terms of the Macs. I think they started to elevate form over function, and particularly the MacBook pros, like it was a really dark period. I actually had to get a desktop computer because I thought

the MacBooks were so terrible. A very hard trying time for me, to be clear. But, and, you know, there's this whole butterfly keyboard fiasco where it was too thin. How much was that? Johnny Ive, how much was he already halfway out the door? Who knows? Sort of TBD. I placed a lot of it sort of the, you had the whole Apple Watch thing where they were doing like 17,000 gold Apple Watches that, you know, didn't feel like, felt a little too precious and a little too doing stuff because we can. Yeah. That's a great example of people who are high on their own supply and smelling their own farts.

Yes. But the watch matured and has turned into a success in its own right. it has and sort of the fundamental concept of the watch and the overall design has endured and is an incredibly useful or popular product useful I guess to some people I'm a well known to not be a real I'm a Garmin guy as has been established on this podcast but yes a smart watch has its has its utilities I don't want text messages on my watch and never will but I know a lot of happy Apple watch owners so the line has been successful but again the key thing here is It's not just Johnny Ive. There is, oh, Tong, ton, that's the other person I was thinking of. Like, like a legend inside of Apple in terms of, I mean, what Apple does is incredible. They do these new phones every year. And designing, it's not just about the, like, it's, these products are so dense.

Like the amount of capabilities they have in this package to, to, and you have to design, of course you want them to be, look great. You want them to work well. They need to have long battery life. They need to have high reliability, like things around like the quality assurance issues are all big challenges. And then one thing that, you know, they're going to have to build a hardware company in this world of decoupling with China or not or what's happening there. Like there's lots of interesting challenges facing them. They will have the advantage that they're starting in this world.

It's not like Apple where they have an entire set up sort of supply chain and now they need to unwind it. But at the same time, this is also a group of folks that are used to. operating within the Apple machine, where Apple gets to tell its suppliers what to do and they get to dictate things. And that is, I think, going to be maybe the biggest challenge for it's not that these people aren't very good. It's not that they don't know what to do. It's that their leverage relative to the supply chain is going to be necessary to build these devices. It's going to be very different than what they're used to coming, you know, from being the big behemoth that, oh, I don't like your prices. I'm going to go into China and set up a competitor for you and give them all

the money to get started and tough luck. Against each other. That's right. And so all that, they're probably underrating those challenges. Best of luck to the team that they're building out to do that. It's going to be a big challenge for sure. But again, are Apple folks going to be better at figuring this out than folks who have never dealt with China? I guess we'll see. So it's definitely exciting. It's very Great pedigree up and down the roster in terms of the names we know and the names who have been reported publicly. So that's encouraging.

As far as what the device will be, I would be remiss if I didn't read a couple of these quotes here from the rollout. Open AI is going to create a product at a level of quality that, quote, has never happened before in consumer hardware. Yeah, my eyes rolled so far back in my head. I mean, like, come on, give Apple a little respect. Yeah, give Apple a little respect here. Like, like, it is remarkable the quality that Apple delivers at scale and they do it every single year. Like that you can compete with Apple on lots of angles. You can compete on Apple in that RAI is going to be drastically better and we can deliver experiences.

And by the way, they have a similar disruptive angle to Apple that they do to Google in that it's all upside. They don't need to worry about cannibalizing an existing product. all these things are true, but when you say you're going to deliver quality that's never happened before. Something that has never happened before in consumer hardware. Yes. Well, AI is such a big leap forward in terms of what people can do that it needs a new kind of computing form factor to get the maximum potential out of it, Sam Altman said. Johnny Ives says people have an appetite for something new, which is a reflection on a sort of unease with where we currently are. Both of those quotes ring true. Well, it does ring true.

And it's interesting because on one hand, you can spin this as a positive where they're not going to try to reinvent the phone, which you should not do, right? Like Apple and Android have won that space. Don't get sucked into trying to compete in an area that you can't compete on. Lean into what you can do. Be highly differentiated. That means you start out as like a phone accessory. That's fine. You don't want to get stuck on that path. That's the positive spin. The negative spin is that, Johnny, I'm sorry you're upset about the impact of the iPhone on society.

That impact is part and parcel of the iPhone's success. And are you going to be so precious and controlling about this not being used in bad ways that you end up cutting off the potential of what it can be? Could just be not used at all. If you're going too hard in that direction. So this sort of cuts in both directions. Yes. Well, Sam Altman continues and says, we are obviously still in the terminal phase of AI interactions.

We have not yet figured out what the equivalent of the graphical user interface is going to be, but we will. And then elsewhere, Sam Altman says, Just to be clear for the listeners by terminal, this is an ultimate mistranslation of or potential mistranslation of tech people talking to the world. He does not mean terminal like terminal disease, as in AI is about to die. I was confused by his use of the word terminal there. So thank you.

What does he mean? He means terminal like there's a terminal application on your computer that I imagine you have never opened up, which is the oldest way to interact with computers where you actually type commands to the computer. Yeah. Well, DOS was a bastardized version of the terminal that was meant for Windows. But yes, it is like DOS. It is text-based control of your computer.

You have massively more control of your computer because you can define far more things if you're just using text to create a graphical interface actually constrains what you can do because you're limited in how much sort of UI you create. This, by the way, is an interesting angle why generative UI is really interesting because you actually could have a graphical interface for everything because they can just, you know, create it on the fly. It changes on the fly. At least in theory. Yep. But so, but the idea is when PCs came along, people use them with the DOS prompt or in the terminal to go back to sort of Unix back in the day. And, and that all still exists. There's still things you could do.

I use the terminal all the time for, for, for, I was just using it just now because my internet connection was terrible. And I'm trying to figure out where's the problem. Did a cable get cut or something like that? Yeah. So I was doing a trace route back to my. Let me get down to the route to figure out the problem here. Yeah, but that's just sort of, I mean, there's, I'm sure there, there are UIs now for, yeah, I can find some thing that will do a trace drop, but what I can just do the terminal. It's very easy. I have not accessed the terminal in like 30 years on a computer.

But that is a helpful expletor. Thank you so much. Yes, good. So, yeah, so. Chiming in there. What he's referring to is being in the terminal phase is we are in the typing commands phase and we don't know what the gooey is going to be. Yes. Now, but we will.

I think the chat interface is very. Very underrated. Again, I think this is a point that that everyone underrates. Text works. Text works all over the world in any language. Asynchronous text works. This idea of talking to someone and being able to go do something else and come back and it's there. That's how we talk to other humans, right? That's a pretty good indicator that this is pretty positive. We have FaceTime and most of the time we don't want to use it. FaceTime. That's right. Texting is great. If I'm not FaceTiming with my kids,

I don't want to FaceTime with you. Anybody who's calling me trying to FaceTime, I never want to FaceTime unless it's Charles or Rose. Right. So do we want to be talking to an AI? Like if Johnny's worried about smartphones and their effect, do we want a device that's taking us out of the physical world and touching grass? You know, it's kind of great that I can sort of pick it up and dash off a question and have the answer there.

There you go. I mean, that's been my take for about a year and a half. Keep text and text has worked wonders for everybody for the last 20 years. It is notable that I.O. Or is going to also be in charge of the apps. So like the design of the apps, we'll see how that goes. I think chat GPT, OpenAI's product expertise is underrated. I think it's a big deal.

They have a they have very good apps that work well. And relative to their competition, it's kind of embarrassing. It's wild. Yeah. I can't believe some of the competition has. hasn't developed better apps, specifically Google, but chat cheap. There is no Gemini app for the Mac. Yeah, no, I was thinking about that yesterday.

It's like, you're Google. It's very straightforward. It's not a resource problem out there at Google. So I would love a better explanation for why there's no app. But Sam Altman says, I think it is the coolest piece of technology that the world has ever seen. So in honor of all those quotes, this is entirely speculative. do you have any guesses at what the form factor

might look like here? I don't know. I don't know. I mean, like, the, I'm not a product designer. This is why Johnny Ive gets paid the big bucks. I mean, the obvious things to leap to is audio being a big interface. I think that.

Well, the glasses angle is, I think, pretty compelling. It's pretty hard to beat. It's easy to get a camera on the outside world. You get audio because it's in your ears. putting things in your ears is actually problematic when it comes to hours and hours. Okay. And so that form factor is sort of an obvious one that makes sense. Obviously, humane did the pin sort of idea.

Home speakers are a possibility. But all this is vaguely sort of uninspiring and unexciting. But I guess we'll see. I mean, it's hard to be classes for the form factor. Yeah, I have no idea. But reading that quote, it is the coolest. piece of technology that the world has ever seen. I felt a great sense of relief when I saw that quote because no one would ever say that

about a pair of mixed reality glasses. And so I hope that they're not going with the mixed reality glasses. And it'll be something a little sleeker, less intrusive. I am mad at myself. I'm mad at Google. If I knew they were doing these glasses, they did do glasses. Dude, the glasses are awesome. No, they're not.

No, they are not. You are biased because you've worn glasses your entire life. Do you know how amazing a product would have to be to make me wear glasses every day of my life? And I honestly don't think there's a product that's cool enough in order for me to make that leap. But maybe I'll be proven wrong by Google or meta in the next 10 years. I don't know. I mean, it would truly be a triumph given you refused to even wear AirPods. That's right.

I got my wired ear font. here live on the pod. I don't even want to get in this. I don't even want to get in this argument because I know I'm going to lose. So what can I say? I promise you I'm going to be stubborn for the next 25 years.

But in honor of my mixed reality, maybe 25 years you'll use the terminal for the first time. I have a vague memory of entering prompts into my desktop computer like 30 years ago. So at some point, I've probably encountered a terminal somewhere along the way.

But in honor of the mixed reality hate there, we're going to go to Hater's Corner here before we shift to Google. Is this going to be a new segment or is this a one-time thing? No, look, in the wake of the Open AI announcement, we did get like a flood of email, like 10 or 15 people emailed it. Look, the video was in many respects a 10-minute invitation to Hater's Corner. So, yeah, fire away. So here is Robert. He says, we're only going to read two haters here. Robert and Alex are speaking for the audience.

Robert says, call me a certified hater, but I'm deeply skeptical about this collaboration. I think Sam Altman suffers from the same disease as Brian Chesky. They both want to be Apple and or Steve Jobs so badly they end up missing what their business really is. Like Chesky, Sam Altman continues to push for a bespoke premium service with high value on design. Advertising is viewed overly negatively. I'm nervous this work with Johnny Ive is further in that direction. They should lean into advertising and making their core offering available to more people. Could a product help the proliferation of OpenAI?

I'll concede it's possible, but I'm concerned that Sam and his team are also taking on significant risk building these products in-house. They should commoditize their compliments, become the next Google, not the next apple. Any thoughts, Ben? Yeah, I mean, I think that's, this is the exact right angle to push back on. I mean, we already addressed it a bit earlier.

And again, maybe there's an aspect of, yes, it's hard not to escape the, wanting to be the next Steve Jobs when you're putting out a 10 minute video that basically shows you palling up with Johnny Ive. I mean, what other message are you really going for there?

But the, the, but that again, if you're you know what's the phrase you just have you know you don't have to be the fastest runner you just be faster faster than the the slowest one or the bears chase you my god i just butcher that needs of haters corner taked out of that conflating phrases but yeah but there i hear you look hey uh if you want to be in the consumer tech company who's more vulnerable apple or google maybe maybe that's a reason to go for it's fair it's very i mean this is why the google thing is so fascinating like it's such a like

Like no one questions their technology. It's just number one, the business model problems. And number two, can they actually build compelling products? Which maybe that's a reason to go after Google as well. But yeah, it does. I think their options are still open to an extent. But this does feel like a statement of intent. And you do kind of have to choose at some point.

If you're putting products out there, you're going to, number one, inspire opposition from other product makers who could theoretically be your partners. And number two, your services capabilities are going to become biased towards your own devices. That's what happened to Google, right? The tail started weighing the dog. They got so caught up in competing with Apple that they forgot what they were and it cost them. Now, again, I think they circled around and came to a better equilibrium. I'm they basically paled up with Apple in the long run, decided to, you know, split the market between

them and we'll have good apps on Apple and things on those lines. But yeah, it's. There are risks here. Yeah, Robert's points are totally fair and may be correct. Yes. Well, as far as skepticism is concerned, someone in tech tweeted today, this is like when LeBron joined the Lakers, but for nerds. And I just want to tell that person that LeBron joining the Lakers has been kind of a

mess over the last five years. They did get a title out of it, but I'm not sure it's a compliment to anyone involved here to use that analogy. You know, Sam Altman has a history of forming incredible partnerships and having them end in very odd on horrible terms, silent acrimony that no one really knows what happened. So Johnny I could be the next AD here. Is that a possibility? I mean, I don't know. Johnny seems like a very, you know, like he's like a very sweet guy, You know, really Really just, really just heartbroken over the impact phones,

the negative impact they might have had. And I'm not sure, I'm not sure Sam cares about that. Well, fair enough. Alex says, Ben and Andrew, holy smokes. And again,

we got like five emails about the video. So Alex is speaking for everybody. Holy smokes from the nine minute, weirdly non-AI. yet seemingly AI generated video, full of self-congratulations and absurd flattery, to the photo on the OpenAI announcement post where Sam and Johnny are looking directly into my eyes as though they are adopting me against my will from an orphanage. I can't be the only one raising eyebrows at all the PR on this announcement.

I think this might be approaching Apple hydraulic press levels of discomfort for anybody who remembers the iPad commercial from about a year ago, if they were unable to design a press release that doesn't make my skin crawl, my expectations for any future OpenAI hardware are now a bit lower. Ben, do you have any takes on the rollout, the announcement post, the video,

hit me with whatever you got? I think, uh... Long pregnant pause. nine minutes and 50 seconds or whatever it was is um that's a tough look um yep look here was my critique stage conversation here was my critique authentic yeah i mean there was a little clinking of the espresso cups that is where it kind of tipped over for me in in the cafe apparently they like one of the credits went to the city of san francisco because they're like blocking off entire streets to to film this um I would say my critique of Johnny at Apple is that he brought tremendous creativity to Apple,

and he also benefited tremendously from working with what I consider the greatest editor of all time. Steve Jobs, yes, he's on lots of patents and had ideas and created things. His true gift was he was the world's greatest editor-in-chief of all time. knowing what had to be pushed, what had to be pulled, what had to be cut, what had to be enhanced, what had to be changed. And Johnny shared that. And the way that manifested in sharing that is appreciating the role of someone that pushes back and yells at you and says something has to be better or this sucks and get rid of it. And being sort of like the Tim Duncan where what was one of the greatest praises that were given to Tim Duncan in terms of the Spurs and Greg Popovich. He was coachable.

Yeah. Pop gets to yell at Tim Duncan and everyone looks at that and says, I guess I get yelled at too, right? And, you know, Johnny I gave one of the best intern. I've talked about the series of intern talks at Apple that I went to. Johnny gave one of the best ones. And he's like, what does care actually mean? And he's like, a lot of people think they're being caring when they hold back on criticism.

And he's like, actually that's selfishness. You just don't want the other person to be mad at you. You don't want them to think badly of you because you told them that their work stunk. And he's like, actually, true care is being honest and is being super clear and straightforward. And I think that's a useful sentiment in the world widely. I would say we've swung. Yes, I get the critique of Steve Jobs being mean. In many cases, we've swung too far in the other direction.

And Johnny Ive was someone that understood that, valued that. and when Steve Jobs was a jerk. Could have used that on this announcement? Well, I think he could have used that in his later stages at Apple. Could he use that with the $17,000 gold Apple watch. And I think this video could have been three minutes. Yeah, I mean, look, and it wasn't just the video, the announcement post also made by Skincrawl. I want to be supportive of what's happening here because it makes the tech world more interesting.

I don't want to be stuck talking about the same part. The font on the announcement page is like a wedding invitation. Oh, it was really tough. It was really tough. And honestly, I mean, like, just, all I'm asking for is normal aesthetics from open AI announcements in the future. The aesthetics that they've been working with for the last year or two are so sterile and bloodless.

It really does make my skin crawl. It's like a transmission from a dystopian future. Is this sterile and bloodless or is it too far in the other direction? It feels pretty sterile and precious. Attempt to not be sterile and bloodless. Exactly. Yes. Exactly.

And it's like a dystopian future where no one has sex. No one gets mad at each other. Everything's just perfect and just so. And I hate it. And I've hated some of the announcements they've made over the last couple years. And that taps into the concern that I put forward. Right. If you're so precious about what you're doing and so tortured by what the iPhone became,

Unfortunately, the reality of the world is that good and bad are a package. And it is ultimately up to the individual using those devices as to what they are used for. And the whole problem with the AI movement in general has been parts of the safety movement. There's different aspects of quote unquote safety. Some is truly about let's make sure we don't sort of kill everyone. But a lot of it is this sort of very precious people can't handle the truth. angle that is really galling and really annoying and really oppressive and feels of a part and parcel.

There's like a millennial chic aesthetic to it all. It makes me want to die. You're the millennial on the podcast. You got to own it. You know, you're like Johnny Ive right now trying to disown the iPhone. Sorry, you're a millennial. You got to own it. Backpedaling away from my generation and what it has wrought here.

Yes. Well, out of respect for Sir Johnny, who I do like, we're not going to. to read some of the more cringe-inducing quotes from that nine minute video. I wish them all the best of luck, because again, it will make the tech world more interesting, the more credible a threat they can mount to Apple and Google going forward. And it made Wednesday more interesting. How do we feel, you know, there's a bit, going back to Robert's point, do we want open AI slotting neatly into their appropriate strategic opportunity, or do we want them coming

out guns of blazing saying we're actually taking on literally everyone. And so. Yeah. Every day. Just like at no tech endorsement. We are ultimately, look, we got to think about our incentives. We are a content creation entity. So big two thumbs up.

That's ultimately where I land. This will make for some fun content over the next couple of years at worst. But speaking of content, there was a lot to keep track of at Google I.O. this week. And so Brandon says, Andrew, did you catch Janus at Google I.O helping launch their new XR glasses? Will this be what finally pushes Ben to ditch the iPhone for Android? We can only hope that Yokic shows up at Apple's WWDC to keep the rivalry going. I saw Janus up there and my heart sank. We really need a trade this summer. The conference finals is in full swing and watching Janus hawking random Google products is too depressing for me to bear in the midst of the NBA playoffs.

Yadis has been, no, Yonis has been a pixel sponsor for years. Yeah. But he hasn't been at Google I.O. Of course it made me want to switch over. What are you talking about? Good.

No, I have decided when I do get another Android device, I've, for some reason I've just never gotten the Samsung one. Everyone's like, look, they're the best ones, just get that one.

A big reason why some of your quibbles, Like for the pixel, I had an issue with the cellular motor. Just get a Samsung phone. They're the best one. So sorry, honest, my next Android phone is going to be a Samsung phone. Gonna be a Samsung.

Well, so on the glasses front, though, because I felt like you've wanted to talk about the glasses for about 35 minutes here. The final section of Wednesday's daily update on Google I.O. was about Google's various AI features. And you were talking about how Android is probably going to be

the most important canvas for shipping a lot of those capabilities. Expound on what you mean there and how you think this might play out for Google. I had such a weird reaction. I tried to capture this daily update. I'm not sure how well I did. But on one hand, this IO was amazing. And everyone in tech is like,

oh my God, Google's back, XYZ. And it was amazing. And it's like this cornucopia of outcomes that is basically downstream from their incredible team, their incredible infrastructure. They have the best model now.

Their image generation model and their video generation model is crazy. You can put text in it now. You know, it's amazing. Like they're doing the best stuff in a world where everyone uses chat GPT, right? Like, and this, this, what was interesting about that is it was so hard to even anchor on anything from this keynote. because what do we anchor on? We anchor on products. Like an actual thing you can go to and use.

And to me, by far, the most cogent and anchorable and made sense compelling presentation was about search. And you feel this sense where Google is a one product company and that product is search. And guess what? Search despite the fact they're facing this disreaching this disreaching. of the impact on advertising, that's the part of Google that still can ship products. And not only they ship products, they actually presented this sort of really compelling, I think, I called it like the AI funnel or the Google funnel where, okay, we're just going to create all these crazy things.

Ones that make context for this are going to ship in this new AI mode. And the most interesting part of AI mode is not that it's a tab on the page. That is interesting in its own right. that kind of looks a lot like chat GPT, where it's much more of a chat interface and stuff they can do. Like Google has all these data connections, because everyone's known for years

you want to get your stuff on data. So they have by far the most best real-time stuff. So this idea that you can ask a question about some sports-related thing and not just get the answer, but then get data visualization that's generated on the fly. Like that's really cool.

And but what's going to happen to the best of those features, they're going to, and this was their word, graduate, to regular search. And I've made the point before AI overviews is the most used generative AI product in the world.

And there's a bit where Google's in this race to make search so good that you keep using it and you don't go to chat cheap T. Right. You're like, oh, I use chat ch CBD for my homework, but I use Google for everything else and you don't even think about it. And they're trying to do that before Open AI gets to the,

and this is why, by the way, the consumer markets are, This is why chat GPT is such a miracle. Like that's why Google pays the money for the defaults, right? Like they, by paying Apple, they get to ride on Apple's dominance of devices such that they're just used without anyone thinking about it. Because that's how you, the consumer market is about habits, it's about what people do. To get people to actually take initiative to go do something new is incredibly difficult. And again, it's why chat GPT is a miracle that it's gotten as far.

as big as it is. And there's this Google. It's like you have you have search a clear output. You have this incredible capability to create these things. And there's just this vast gulf of productizing them that it doesn't feel Google has any real capability to do outside of search. And that's why I'm very pro-Google. So you're watching all the demos sitting there and thinking, wow, this is really cool. This is jaw-dropping.

This is mind-blowing. but like regular people are going to seek out. Andrew Sharp going to use this capability, right? I mean, you should. You should ask that. I should be there by your side watching some of these keynotes, man. I will say Bill Bishop used notebook L.M to summarize a Sharp China episode this week. And it did a fantastic job in less than 2,000 words.

It hit all the right beats. But how many people are going to be seeking out notebook LM on a day? day-to-day basis is a fair question. All the AI stuff is so productivity-oriented. Maybe that's why I'm so excited about it, right? I'm always big on productivity, productivity apps, XYZ. I wrote it, but my whole initial series on the app stores about productivity apps, Apple should enable them more.

And then you get to the epic trial and Apple's like, yeah, we make 90% of our or whatever of our revenue for people like gems and games, right? It's kind of discouraging in a certain respect. But yeah, I mean, because it's crazy. This capability is so good. This is such a condemnation of Apple, by the, way. Like, I was talking to a friend who was complaining about Siri transcription.

Like, transcription is a solved problem. It's trivial at this point. Open I open source whisper ages ago. It's widely available. I use apps on the Mac where I have to go and download the Whisper model for it to do the transcription because it's not built in because Apple, I don't know what they're doing. I mean, well, I mean, the Apple. angle this week, you had a latest Mark Gurman expasse on their, their AI failures.

Like, people so asleep at the wheel. Like, just not seeing the potential here, just-chasing it. Shockingly negligent. Yeah. And then combine with the, this week, oh, maybe we'll let developers use somewhere about it. It's like, man, like, I don't know, like, now I'm back on charge of it. Look, open eye, look. There's a wounded animal here.

Exactly. A good target right now. But for Google, yeah, yeah. So like realistically, how is a customer going to actually use this stuff? I think realistically it's on Android. It's on their phone. It's sort of front and center. And they start picking it up. Like they talk about a lot of pickup on Google lens, like visual search basically.

They've been very enthusiastic about it for a few quarters. So, you know, it makes sense. It's compelling. Isn't that the goal with search and AI mode? is ultimately it's sort of like Instagram and Snapchat all over again. Try to integrate as many of these features into search as you possibly can

and make it so that people are... So that Google search is sticky and you retain as much of the user base as you possibly can. And with AI mode, what they're going to do if I was understanding the presentation correctly is they'll refine these features

and optimize them in AI mode. And then like you said, once it's good enough or optimized enough and potentially cheap enough to run to 2 billion people every day, that's when it graduates to main search. They were like 6 billion people every day. I mean, the scale is kind of amazing. But yeah, I think that that's exactly right. And it's a very cogent strategy.

I think it's easy to sort of poo-poo AI mode or it's off to this, you know, why is it off to the side? That's why it's off to the side. And that's both the opportunity, which is they, already have all this usage and they can make it better, it's also the challenge because they can't give them the best experiences until it's like possible to serve that many people. It's hard to serve a lot of people. This is like Apple's problem. There can be new things to actually put it in an iPhone is like like the people are talking like the foldable screen thing. Are we going to get a foldable screen iPhone? I would imagine so at some point. Also the number of foldable screen phones sold in

the world is like the number of phones Apple sells in a day. Right. Like it's just like, The scale of these companies is their biggest advantage and their biggest disadvantage. That will always be the case. Yeah. Well, and it reminds me of when they started rolling out AI answers to like general search queries. And it was a mess because the AI answers were kind of spitting out weird feedback. Yeah, exactly. So it makes sense to refine it.

And also you in that scenario, you find out what is most compelling to people and what is actually worth investing in and graduating to the main search. Yeah. And a lot of people were giving Google a hard time about, you know, they had the $250 plan, you know, more leadership from Google. I think $200 is good. Let's show you, let's show you a real price point. Yeah.

And I like, people like, look, they should just be making this free and like they have the best stuff, get it out there. And it's an easy thing to say. Like there's billions and billions of dollars at stake. they the audience that is paying that much money is a highly sort of switchable audience. They're just going to go back and forth. Like everyone was like, Anthropic is amazing.

Now it's like, oh, actually, Gemini is the best. And it's like the, you know, dropping the toy. It's nerds like you that are trying new LLMs every other week here.

Yeah. Yeah. I mean, I wish, again, I wish the products were better. I wish they had an app. I wish,

you know, the flow thing they used to use, VO was really rough. You know, it's like, again, their product capabilities, I have serious questions about. But I'm glad these capabilities are available. There's a lot of fun to go out and previously, you know, you'd be able to use V-O-3 and make some fun videos and stuff like that. So I don't, I don't hate it. Like, maybe we'll look back and they got totally disrupted and you could argue they should have built up this interface from

scratch. But it's the whole thing about disruption is you face really hard constraints when you're a large company with a big business. And I give more grace to companies facing that maybe than some other folks, even if it does end badly. So we'll see. One question on V-O-3, the generative AI video tool that they displayed this week. That is currently living the Studio Ghibli viral cycle here. Twitter is awash with nine-second videos that are being generated by V-O-3. And I am curious, what is gating the mainstream availability of GenAI capabilities, like something that would create videos longer than 10 seconds? Is it a question of cost and computing costs,

or is it more a question of computing capability as the videos get more elaborate? I mean, and I'm rooting for these to be delayed for as long as humanly possible here. I don't want to live in a world. This is a great example of why people who forecast the future, like a lot of the AI Dumers and things on those lines, get it so fundamentally wrong. Okay. Which is, it's unbelievable, mind-blowering. incredible, awe-inspiring, shocking, impossible to believe that you can create coherent eight-second videos with audio.

No one in the world thought this was remotely possible a year ago, two years ago, definitely five years ago, six years ago. And you're sitting here saying, I'm not sitting here tapping my foot. So I forget all the adjectives. unbelievable, jaw-dropping, mind-blowing. To be perfectly honest with you, all the AI-generated videos are a bit annoying to me.

That's why I invoked Studio Ghibli. Everybody's sitting there on Twitter being like, can you believe that you can do this? I just typed in some text, and here we are. They're not really moving the needle for me personally, but I do watch those videos, and I'm like, well, hey, this is pretty impressive. This is pretty good.

And I worry what the world is going to look like when everybody can just at the drop of a hat generate like three minute fake videos and see I just I want to delay that future as long as we possibly can and so I'm wondering whether it's a cost issue or just a coherence

The costs are all are astronomical like right now. You can actually track like you have a like how many credits you have as like a Jeb and I ultra customer which I now am so now I have like $550 a month and in monthly AI expenses.

The cost of being a nerd. There's a lot of credits that go into generating those videos. And they have to generate the whole thing and it has to put it all together. And it's like it's on the edges of capabilities. The fact of eight seconds is amazing. Of course it will extend in the long run. That's sort of the course of technology. This stuff gets cheaper.

So you do have to look out what does it mean when these are cheap and these are broadly available? And yes, you probably should be concerned. Then again, I mean, like, Formula One, one thing that amused to me about F1 and Twitter is it's like, it's like this, I don't understand it, but it's like this world of newbies and novices that have just like been dropped into. Like they take Twitter way too seriously. Always have. Like people getting all worked up about, oh, abuse on social media. It's like, my God, have you been online at any point in the last 20? 25 years. Well, have you figured out a lot of the most popular accounts on Formula One Twitter are

like 19 year old women from Italy. So maybe they maybe it is more of a foreign environment. Right. But so, but so there is a, um, so the other problem is like F1's super ridiculous. Like, and so there's this formula fakers Twitter account that has gotten me a couple times because it will post something that I don't like plausible. No, it's actually too good. Like MBA Centel is like one of the originals on this. In the NBA, number one, they're mostly ridiculous. So you know it's, it's ridiculous. Also, like the NBA Twitter is like very mean, very hardcore.

We're living in the muck. We've been in the muck for a very long time, right? You just, if you can't handle abuse, you cannot handle NBA Twitter. It gets more negative and more abusive every single year. At this point, I'm not sure Twitter likes a single player in the NBA. No, exactly. Like the frog boy. sort of analogy. Like the water is long since evaporated. There's a charred carcass at the bottom of the pot, but somehow still tweeting, right? So, but so you have this, this thing with, with F1. So there's a formula fakers puts out this tweet, joking about Jack Duhon, who recently lost his seat to Franco Calpinto, laughing, making fun of the fact that he crashed last week. And it was a fake post that generated this massive controversy and everyone freaking out. And the long.

and short of it is, we just all need to get to a world where we assume everything online is fake. And that it's all, so maybe it's actually a good thing. Actually, we need to accelerate fake videos. So people stop believing what they see and realize that we all need to go and touch grass, get back to the real world. Trust your own eyes when they see physical things. And I hope, I hope with all my heart that you're right, I'm definitely leaving room for the possibility. that you're right because you're right about most things in tech. No, no, this is, to be clear, is it optimistic and hopeful take.

It's a glass-half-optimistic spin on the dystopian hell that awaits us. But we'll see. For now, let me close with two emails related to your appearance on the Bill Simmons podcast this week. So first we have Jonathan who says, Goats, Ben's recent appearance on the Bill Simmons podcast was incredible. I've been a Simmons fan for nearly two decades. But very few people challenge his takes. I absolutely loved Ben's heat and the way he laid into some of Bill's takes. Rosillo, Zach, House, they all roll with it.

Ben did a fantastic job calling out Bill for his Janus Slander. And the coup de grace, was referring to Jason Tatum and Jalen Brown as two number two players. I cackled out loud, A plus content. And then we have at Taco Kennedy 66, who tweeted at me as part of this. Don't ever go on a sports podcast again. You clearly don't watch any NBA if you think, one, Janus is underrated, two, Amman Thompson and Evan Mobley are overrated, and three, you think Tatum isn't close to Janus.

Can Janus do anything on offense, but just drive to the basket and pray? So there you go, Ben. Two ends of the spectrum. Well, this Taco Kennedy 666 guy, the reason he replied to you is, so first off, I'm annoyed at the ringer because they said, oh, Bill on with at Ben Thompson instead of at no tech Ben.

Look, I want. You were not appearing as at Ben Thompson. That's right. No Tech Fed exists to drop takes, go viral, and receive abuse. Okay. Ben Thompson is out here trying to do a good job. Okay. Promote a product.

Yes. Right. So that's number one. But number two, he responded to my pin tweet, which is like, I've watched a new podcast called Sharp Tech. And he's dropping. So I felt I don't mind, right, I don't mind the response, but I did have to hide his reply because I'm like, this is the wrong place. Like, respond to the ringer tweet.

Don't drag down sharp tech. You know, again, I'm putting myself this position. I accept responsibility. But sorry, Taco Kennedy 66. So I'm pretty sure is not listening. You know, I did have to hide your reply. I also know he's not listening because. no one who listens

Sharp Tech would have such bad takes as he does. Obviously those three assertions by me were correct. For the record... Unimpeachable. I was very early on being pro Amman Thompson. I've liked his game of a lot.

Oh, he's just gotten a little bit overrated. We're still pro Amman Thompson on this tech podcast. You still trade Amman Thompson for Janus Odena Kupo. That's the point. Like, whereas Rockets fans are like, he's guaranteed to be a Janus level player. Therefore, we should not trade him.

that is an overrating in my estimation. But that said, it's a possibility. So if the bucks trade for him, I mean, I buy a, obviously I'm buying a Thompson, Buck's jersey first day. So I'm not going to complain about it from that perspective. So I felt I stand by the take in isolation. I felt bad. It could be misinterpreted because I am team.

Amen. Ultimately pro amen. Yes. And I agree with you that Amen, there's at least a version of his future where he is somebody you can run the offense through. That's right. I think the chances of him becoming that player are just as good as rolling the dice for a top pick, right?

So that would be a replacement. Whereas Evan Mowgli, the chances of Evan Mowgli becoming that player are just about zero. No, there's zero. There's, yeah, great role player, not someone. Second banana, perhaps. You have to remind, when you're scouting Evan Mowley, so you're watching a Cavs game,

you have to remind yourself to pay attention to him. because you go long stretches of forgetting that he's even in the game. Sorry, that's not star material. You don't forget Janus is in the game at any moment ever. So, um, anyway. Well, whatever. I already made these takes. You can go listen to it.

It was a very enjoyable appearance. And, uh, it's very funny because like, uh, the, I mean, Bill, Bill's great. He's a professional. He also like, he gets, like, he gets really annoyed when you challenge him. We have, we have, we have messaging fights all the time about this. But in the context of a podcast, like, it's, I sent the audio once of a previous appearance because I wanted to hear it and it wasn't coming out for a couple days. And they're like, oh, wow, you and Bill talk totally different when you're recording or not. I'm like, well, I mean, look, there is.

You're playing a character. I am on there to play a character. I am a character who nevertheless does sincerely believe everything he said. Oh, that's true. For sure. I could attest to that. I really identified with Bill because he let off asking about trade ideas. and you launched into a four-minute monologue that wasn't really even about trade ideas.

It was about, like, years of honest grievances. And I've been there as a host sharing the podcast with you. And then also, Bill saying, that's just bucks bullshit. I wanted to say that to you for years and years. So thank you to Bill Simmons. I mean, the first time, the first time that I was on, oh, no, it was the second time I was on with Bill. The first time I was on, we just did tech stuff. And so then the second time we did tech stuff

And at the end he's like, okay, you have 30 seconds to talk about Jason Kidd. And I dropped like a five minute rant without breathing because I'm like, I have my one chance to get it out here. So it was a bit of a full circle in that regard. Well, and it's good. He knows what he's getting when he asks you to come on the Bill Simmons podcast.

It worked because I think basically ever since that I've been on mostly to talk about bucks, not to talk about tech. Let's not waste our time with that. That's what Sharp Tech is for. And Ben, we will be back next week. It's a holiday weekend. So one episode next week.

But people can continue emailing us, email at sharptech.fm. And I hope you have a great couple of days. I will talk to you on the other side. Thank you. Happy Memorial Day. And, yeah, see you in a week.