Tech Brew Ride Home - Mark Gurman Says Apple “don't even know for sure” What Project Titan Is Building

Episode Date: February 17, 2019

Mark Gurman of Bloomberg, the reporter who gets Apple scoops like no other. Quick catch up with Mark about his recent scoops, but also some Apple analysis in general:  Apple has spent as much as 3 billion dollars on its original content for its new streaming service.  But… they have probably fewer than 10 original movies locked and loaded. When it comes to “Project Titan,” Apple’s self driving car project, Apple still doesn’t have any idea where any of this is headed.  I was skeptical we’d actually see an Apple AR headset. Actual Apple Googles. Mark thinks we really will... but not until 2021, or 2022. Sponsors: Capterra.com/ride LinkedIn.com/ride Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to a bonus weekend episode of the Tech Meme Right Home. I'm Brian McCullough. This man needs no introduction, Mark German of Bloomberg, the reporter who gets Apple scoops like no other.

Quick catch up on this episode with Mark about his recent scoops from just this week, but also some Apple analysis in general, including Apple has apparently spent as much as $3 billion on its original content for its new streaming service, but they have probably fewer than 10 original shows slash movies locked and loaded. When it comes to Project Titan, Apple's self-driving car project, Apple still doesn't have any idea where any of it is headed. And I was skeptical that they had any idea where this was headed either, that we'd actually see an Apple AR headset, Apple goggles. But Mark thinks we really will, except not until 2021 or 2022.

But first, okay, the great Mark German, Apple Scoops, let's do it. Before I go into some of the things that you did this week, let's talk about the services event. We're pretty sure at this point it's going to be both the TV service and the news service as well. Like, both are going to be probably demoed. That would make a lot of sense to me to have one event to announce. They're two big services launches for this year. And it's important to note, these are the first two major services that Apple's going to be launching since 2014 and 2015 when they did Apple Pay and Apple Music for the first time. So this is quite the undertaking for them.

This is them saying, hey, we can do big services too, just like Netflix, Amazon, Google at all. And so they want to make a big deal out of it. And that's why you're going to see the splashy launch event. what are you hearing about this whole floated 50% revenue share thing like do we know exactly what Apple is saying to these publishers to justify that percentage well i mean apple's pitch from their perspective is pretty simple it's the same pitch they've been making all along it doesn't really matter in sort of in there from their perspective it doesn't really matter what the cut they're taking but what their pitch is is the amount of volume that the

with the news publishers, the magazine publishers, will be getting long term because of this initiative. It's very similar to the pitch they had to the music industry, you know, two decades ago about the royalties they were going to take. It's basically, you know, you can take your percentage in our, you know, big distribution model to all our customers, or you can let your stuff get pirated. I was basically their pitch back then.

They tried this with the TV folks, the video industry for many years when trying to build an over-the-top bundle to the TV service. Obviously, it didn't work out there. They're betting that it's going to work out with the news publisher industry. And I guess the benefit they have there is that there's an app called texture, the Apple bought at the beginning of 2018, and that already had a bunch of magazine deals in place. So this would be Apple sort of continuing that.

And basically the magazine publishers would be asked, hey, do you want to be part of it? now that this is going to be the service built into Apple, or do you want to pull out from that? And so they're pitched to their, it does make sense from their perspective, but obviously from a news publisher perspective, 50% is a lot. Well, what's your take on, you know, some people think that they're floating this 50% figure as a negotiation tactic so that, like, it'll really in the end, it'll end up being 6040 or 70, 30, or something like that. Like, I have heard, too, that, like, there are already people that have been.

signed up for the 50% thing, but like is, is it a possibility that this is sort of like a PR thing floated to try to get the New York Times and everybody else on board as well? I don't think from Apple's perspective, no. I think more so from the news publisher perspective that it's possible that someone floated that 50% number to show the audacity or how outrageous it was in hopes that making it public would push Apple to reconsider. Taking something public makes the clock. start ticking. The Apple event being out there has the clock start ticking. They have a deadline for when they need to get this thing done on both sides, right? The news publishers want to be

part of the initial launch. And Apple obviously wants that initial launch to happen with as many partners as possible. On the TV side, the TV service, how serious do you think Apple is? How committed to the original programming part of this equation? Because obviously, that's the other thing is like maybe, you know, certain TV subscription partners won't be involved in the launch of that. So how much, in your opinion, is it, well, no, we're just, come to this one app for all of your TV needs versus how much of it is Apple being like, no, you're going to come for the great content that we're going to give to you as well? Right.

It's a long time coming. I think this is something that they've really, their money where their mouth is. I know they've spent between maybe one and three billion dollars purchasing original movies and TV shows that they want to make part of it. And basically, it's a threefold initiative. And it's all, I'll just explain to a little bit about how it's going to work. So you have the TV app. You have that on your Apple TV. You have it on the iPhone, the iPad, and the iPod Touch.

Eventually, I bet they'll probably bring it to the Mac as well. And it's basically threefold. One, you have the integration with applications existing programming. So you have your ESPN app, you have your NBA app, you have various other apps that you would watch TV content through where you're logged in through your TV provider, whether that's DISH, TV, Spectrum, Time Warner, et cetera, et cetera, or whatever the other providers are across the world.

That launched at the end of 2016. They expanded it with sports and other things in 2017. They did a little bit more across 2018. So that's phase one. That's already been out there. That's already in use. I use it. That's the app integration.

Part two is the integration with subscription bundles. So we've talked about HBO. We've talked about stars, some of those other programs, paying a flat fee, a bundle to sort of get all of that content inside of the application. That's part two. That's what we're going to see this year. Also, there was part three, and we're going to start seeing the little bits and pieces of that into the summer. perhaps in May throughout the course of the year. And I think this is going to be a rolling type of thing that we're going to see,

you know, probably on a weekly or monthly basis, sort of like Netflix. That's going to be Apple's original programming. They have probably fewer than 10 original movies locked and loaded. In development, they have TV shows, dozens of them, I believe, between two to three dozen on the docket. They have a few of them where they already have one season finished. So the original content is going to be strong too. So three things. It's integration with existing TV channels and apps.

You have the subscription bundle with stars and some of those other providers. And then you have Apple's original content. And that's what the TV app is basically all forms of video and movie content all wrapped into one place. On top of that, you have your iTunes movie library in there as well. So maybe you can consider it a four-part initiative. Real quick, before I move on to specific scoops you had this week, what the heck is going on with the Apple certification program story? Because, I mean, they're so usually fastidious about things like this,

you know, locking down what can and can't be done on their stuff. Like, how is this weirdly some little angle of it that they were just so lax on? Do you have any insight on that at all? Yeah, so this is something that's been going on for several years where developers have been using the enterprise distribution. For those unfamiliar, there's basically two ways for developers to distribute apps. One is via the App Store. Two is via the enterprise program.

The point of the enterprise program is to be able to distribute apps for employees at your company. So not selling them on a wide basis, but just giving them for phones in your company. So, for example, Google uses it for certain applications like their employee cafe menu or the bus app. The other companies uses as well. Apple has several internal apps. Every company you could think of has those internal apps. So that's what it's for. But some developers or people have been using it as a way to distribute applications to the outside world.

There's plenty of companies. Sonos has done this where they've used them as a beta app. And this really blew up when Facebook was found to be using this program in order to distribute that research app. And then you see the pylon of other people finding other people using. Well, now it's porn and fake Spotify apps and things. things like that. But my question is, how come they're usually so locked down on everything and fastidious? And in this particular case, they apparently weren't minding the store at all. You know, I don't know if it was a big deal to them. I mean, obviously they knew about this.

People who have been following this closely knew this was a thing, and there was really nothing wrong with it until it was found to be used for nefarious purposes. So I'm sure they knew about it. But until it was being used for nefarious purposes, there really wasn't a reason to shut it down. That's really odd to me. Out of character, I guess. Because they're not losing money on this, right? These are free apps.

It didn't seem like people were selling those apps or building their own app stores, right? Like, I'm sure if, you know, you developed your own app store, you know, the TechMeme App Store where you sold a bunch of different apps via an app of your own, you know, Apple would be losing out on a percentage here. But it really wasn't impacting them from a financial perspective. but when they saw that it started what people were using for nefarious purposes like you mentioned in the spyware applications

the Facebook research app, et cetera, et cetera. Google had one too for some time. That's when they have to take action. Okay, so I actually did not mention this or didn't get a chance to mention this this week, but you had a scoop about Apple self-driving car initiative, what are called disengagement, you know, the leader,

Waymo, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the human has to take over only every 11,000 miles or so, versus, uh, Apple's cars, apparently, because they have to report this to the California DMV, um, they, the driver has to take over every mile or so. I, I don't want to ask you about that specifically. More generally, I still can't wrap my head around Project Titan at all. Like, like, it's this giant, gargantuan R&D suck for Apple. And sometimes it's like, and sometimes it's like, I'm serious about it. And, and we might actually get a real, like, Apple car someday. And then other times it just seems like a, almost like a money suck, black hole. So how do you think about Project Titan and what Apple is really doing there? I think they don't even know for sure. I think they're not certain what the end game is, but I think they're giving themselves multiple opportunities to choose from different directions. One direction they could use is taking that autonomous technology,

applying it to something else like a drone or some other device down the road. They can take it and go back to building a Tesla competitor or a car itself. Or they could license that technology to a company like Uber. There's many different directions they can take this. And I think we're not really sure what they're going to do with it yet. But I feel like as a major technology company in 2018, 2019, it would be sort of irresponsible for them to not. have something ready if they indeed need to enter the self-driving car space. Well, similarly with AR, again, another huge R&D suck.

You have the scoop this weekend that the big iPhone marketing honcho is moving over to market for AR products, which would make people think, ah, we're going to get a hardware product, a hardware AR product maybe someday. We're going to get some sort of Apple glasses or Googles or goggles, sorry, or something. but this is another project that seems sort of opaque and hasn't produced anything yet. So what's your take? Is this, again, they're just feeling around in the dark to see where this technology goes, or do you expect there to be some sort of actual hardware product for AR?

No, I think AR what they're doing there is pretty much the exact opposite of what they're doing with Titan and their work on autonomous vehicles. I think they have a very crisp, clear plan about what they want to do, and they seem to be executing it well. I mean, phase one was, you know, promoting the heck out of AR. He saw Tim talking about augmented reality as much as possible, sort of putting that technology on the map instead of VR. Then you saw AR Kit in 2017, the ability for developers to more easily write AR apps,

ARKit 2 in 2018, we'll get AR Kit 3, WWDC. So cool stuff they're working on there. That's the software side. That's on the iPhone or the IPV. iPad. Phase two of that was sort of you saw the animojis, Memojis, some AR hardware in the latest iPhones. The next year in 2020, they're going to have a new iPad around probably spring, WWDC if we're going to get pushed back to the fall of 2020 with a 3D AR camera. Likewise, the iPhone for 2020 with a 3D AR camera. And then probably the year after that or two years after

that, you'll see the AR Apple headset, which I believe is going to be sort of a blend. of ARVR, more like the HoloLens and Magic Leap, that's going to be when they have their dedicated AR hardware product. And there's a history of them appointing important marketing people to new categories when they're about to take a leap in that section. For example, Michael Chow, who runs marketing for the iPad, he worked on the Newton way back in the day in the 80s and 90s. They brought him back right before the iPad launched to oversee iPad marketing before the Apple Watch

came out. They reassigned a marketing executive named Stan Ng, did marketing for the iPod for a very long time, transitioned him to the Apple Watch. You know, you see all the Apple Watch ads and the marketing happening there. So in terms of marketing products and assigning people to it, and in terms of when they're going to make those assignments, they seem to have a pretty clear pattern for when they're doing it, and they seem to know what they're doing in that regard. This will help me, if you'll indulge me a little bit, ask you a couple of questions about your process because like what you just described is like you know you've almost been covering apple for so long that you you've you've got a really deep sense of like the long arc of history of this company so like

when you hear little bits of chatter and things like that like have you been doing it so long that like you have a sense now well this rings true and that doesn't ring true based on everything i've ever known about apple i don't think they're going to do this but they would do that is like do you have like a deep nose for that sort of thing right now you have to be able to anticipate what they're going to do before they do it in order to figure out what they're going to do, if that makes sense. Sort of have a hunch and know what to look into based on past history and based on what you think they're going to do.

Without being too specific, is there a general method that you have for cultivating sources, getting them to trust you? Is that like a long wooing process, I guess it is for any journalist? But especially for a company like Apple that's so secretive? I go on their podcasts. Ah, ha, ha, ha, yes. Well, don't tell anybody. Next time I call you.

But the sources, do they come to you now because you're so prominent? You know, I'm not going to get you to that. Okay, okay. Okay. Okay. Do you, what's your relationship with Apple officially? Like, I read that at times in the past, you, you know, you kind of felt like they kept you at arm's length. Do they still, do you?

feel like you have some sort of like a detente or somewhat neutral relationship with them right now? You know, I think Apple is a great company. I respect them. It's an amazing business. I use their products. Everyone I know uses their products. It's great to be able to cover their launches from their events, get hands-on with the products. But I don't think being there or not being there, relief he tracks from coverage. Since I've been at Bloomberg, I've been at most of their events, and that's been great. And, you know, I respect their company. They have a large PR and communications arm, and they clearly know what they're doing. And if they didn't, they wouldn't be as successful as they are today. So definitely respect them as someone covering them and as a consumer.

Final process question. How often do you report on a feature or something, some detail, and you know you're right about it, but then when whatever it is sees the light of day, it's changed, and you think to yourself, I bet they change that because I reported on it or it got out. You know, I think they do what they want. I don't know if media necessarily shifts some of their product plans. Many of these things are in place months and years before they actually happen. So, I mean, I guess it's possible. You know, for some software things, they may have chosen, you know, 10 or 15 different designs for something.

And if it leaks really early, maybe that inspires them to not pick the one that leaked. I mean, I guess that's a possibility. Those are things that have been discussed in the past for sure. Final, final question, and this is just general, sort of taking the temperature. Has the mood inside of Apple changed recently? like with the earnings restatement, the sudden need, lowering prices, selling phones overseas, like just the temperature and mood inside the company or with your sources, has that changed in any meaningful way that you can detect?

I think it depends on who you ask, right? Some people, you know, I don't know what you're talking about. I hadn't heard that. Other people are, you know, stressed about it, I would say. I think that's just how it is at any company, depending on who you ask. you're going to get a different opinion. You can ask 100 people and get 90 different opinions on the situation inside Apple.