Tech Brew Ride Home - Tue. 09/08 – Xbox Series X and (Series S!) Details Revealed

Episode Date: September 8, 2020

The details around the new Xbox’s have been revealed. China wants to draw definitive global lines in the tech cold war. Google makes a big bet on the “no code” movement. Content pirates have suffered a historic setback. Was Masa Son pumping up the entire stock market. And we know when the iPhone event will be. Sponsors: MintMobile.com/ride DoubleUp.agency Links: Xbox Series X and Xbox Series S release date and price finally revealed (WindowsCentral) Leaked Xbox Series S commercial reveals 1440p, ray tracing, and 512GB SSD (The Verge) China Launches Initiative to Set Global Data-Security Rules (WSJ) Google binds no-code tools, API management and serverless computing into new development platform (Silicon Angle) Scene Bust Triggered Historic Drop in ‘Pirate’ Releases (Torrent Freak) SoftBank’s Bet on Tech Giants Fueled Powerful Market Rally (WSJ) SoftBank, Robinhood and a Margins Singularity (Margins Newsletter) 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 the Tech meme right home for Tuesday, September 8th, 2020. I'm Brian McCullough today. The details around the new Xboxes have been revealed. Google makes a big bet on the no-code movement. China wants to draw definitive global lines in the tech Cold War. Content pirates have suffered an historic setback was Masa-san pumping up the entire stock market. And we now know when the iPhone event will be. Here's what you miss today in the world of tech. Windows Central had the big scoop of the morning, Xbox Series X is going to be priced at $499 U.S. and will launch on November 10th. Not only that, but they leaked and Microsoft later confirmed the pricing for the entry-level Xbox

Series S console. This is the budget console. It will be $299 and will also be released November 10th. But let's come back to the original Windows Central scoop, quote, We can confirm via our sources that the entry-level Xbox Series S will cost $299 at retail with a $25 per month Xbox All-Acess financing option, which Microsoft is planning to push hard via various retailers and a large global rollout. The more powerful Xbox Series X will cost $499 with a $35 per month Xbox All-access financing option. The Xbox Series S just leaked via Brad Sam's giving us a glimpse at Microsoft's entry-level,

next-gen skew. The Xbox Series S is small enough to fit inside an Xbox Series X, and we expect it to be around four terraflops, RDNA2, making it roughly around as powerful as the Xbox 1X, perhaps geared towards 1080P monitors with better frame rates. We don't have further details on the console's capabilities beyond that, but we expect NVME drives and many of the newer next-gen features like fast-resuming multiple games and ray tracing. The Xbox series X is a 12 terraflops beast of a console that will boast 4K resolution and 60 frames per second as standard, with some games like Halo Infinite going all the way up to 120 frames per second in multiplayer. The prices Microsoft have put forward for the Xbox Series S and Xbox Series X, put them

firmly in line with the Xbox 1S and Xbox 1X, and it will be interesting to see how Sony prices the competing PlayStation 5 in response. Microsoft has committed to bringing the entire Xbox one game library, including backwards compatible Xbox 360 games, forward to the Xbox Series S and Xbox Series X, and your best Xbox One headset and all of your other accessories will just work on the next-gen systems as well, end quote. So a couple of things. Yes, it will be interesting to see how Sony prices the new PlayStation vis-a-vis this news, like, that is very aggressive, low pricing to paraphrase Teddy KGB. And also note the move towards finding, financing these systems in monthly payments. Subscription revenue as the new business

mana rears its head once again. As I said, Microsoft confirmed the leaks, tweeting a picture of the Xbox Series S showing a small device. Microsoft says it's the smallest Xbox ever, and indeed it appears to be lacking a disc drive, and indeed it looks like it could live inside the belly of the Series X design we've seen. And later in the morning this morning, Well, I'll let the verge tell you, quote. Twitter leaker Walking Cat has posted a promotional video for the Series S confirming that the console is targeting 120 frames per second gaming at up to 1440p resolution and offering 512 gigabytes of storage.

The Xbox Series S will also include support for rate tracing, variable rate shading, and variable refresh rate. Microsoft is also including support for 4K media streaming and even 4K upscaling for games. The video also reveals the Xbox Series S is, the smallest Xbox ever, and it will be 60% smaller than the bigger Xbox Series X, end quote. So the Series S is an odd move in the sense that it's a next-gen console that won't be able to do 4K, but maybe this keeps budget-conscious gamers inside the ecosystem until the price for the Series X comes down a bit. I don't know, as Linus Tech Tips tweeted, quote,

a whole gaming PC for the price of a graphics card. Your move, NVIDIA, end quote. Back on the U.S.-China Cold Tech War, Tech Cold War, I don't know, we're going to have to finalize a term for what we're seeing. Back on that tip, though, cold wars are cold because they're not hot. You're not fighting each other directly. You're fighting via proxies. During the Cold War of the 20th century, it mostly played out as a war of influence and propaganda in all. other countries, largely in the third world. The U.S. and the USSR competed to get various countries

to essentially sign on to their worldview, their global system of economics and politics and what have you. Well, history might at least be rhyming now because China has launched a global data security initiative to counter the U.S.'s so-called Clean Network Initiative. China is urging countries to oppose what it calls mass surveillance against other states. In other words, as the U.S. has been trying to get countries to sign up to its system of non-Chinese tech in telecoms and other technology, China is now rolling out its own system to counter this, quoting the Wall Street Journal. China is launching its own initiative to set global standards on data security, countering U.S. efforts to persuade like-minded countries to ring-fence their networks

from Chinese technology. Announcing the initiative on Tuesday at a Beijing seminar on global digital governance, Chinese foreign minister Wang Yi cited growing risk to data security and what he characterized as efforts to politicize security issues and smear rival countries on technology matters in an apparent swipe at Washington. To counter such challenges, quote, it is important to develop a set of international rules on data security that reflect the will and respect the interests of all countries, Mr. Wang said, according to a transcript from his speech published by China's foreign ministry. Under its new global initiative on data security, China would call on all countries to handle data security in a, quote, comprehensive, objective, and evidence-based manner, and maintain an open, secure and stable supply chain for information and communications technology and services, according to a text release by the Chinese Foreign Ministry. It would also urge governments to respect other countries' sovereignty in how they handle data in line with Beijing's vision of cyber sovereignty, whereby countries exercise full control over their own corners of.

the internet. The initiative doesn't mention the U.S. or its clean network program. Mr. Wang nonetheless made it clear in his announcement that the move comes in response to the White House effort, quote, bent on unilateral acts, a certain country keeps making groundless accusations against others in the name of clean network and use security as a pretext to prey on enterprises of other countries who have a competitive edge, Mr. Wang said, according to the transcript, quote, such blatant acts of bullying must be opposed and rejected, end quote. Chinese diplomats have approached a number of foreign governments to seek their support for Beijing's initiative. People briefed on the matter said, it wasn't clear how much interest it is garnered so far,

end quote. So, since more than 30 countries and territories have signed on to the recently announced U.S. Clean Network program, yes, it does look like the balkanization of the internet is really happening. I will point out that in theory, China's version of the Internet, the version where countries have sovereignty over their own data and bits and packets that whizz around inside their borders, is completely antithetical to the original vision of a completely decentralized Internet as it was conceived. But one could argue, well, you know what I'm saying. I don't want to live inside a Chinese version of the Internet at all. But increasingly, the original vision of the Internet seems to be dying everywhere. so one wonders if we'll even have a choice someday. Anyway, I'll let smarter people than me editorialize about this. Let's start with a tweet from David Kay, quote,

China has been pushing to internationalize its managed internet for years. Pompeo's Clean Network Initiative gives it a boost, but it's still the same, a multilateral smoke screen to protect its own deeply anti-human rights domestic approach, end quote. Here's John McComb, quote, The Chinese Communist Party is the worst electronic surveillance and hacking regime in history. Now that they've cyber-looted the West, they want to close the back door.

Choke on the irony. And here's at Colonel Retired John. Let's see who aligns with Chinese data security standards. North Korea, Tonga, Venezuela, Iran, Zimbabwe, and who else? End quote. I'm guessing maybe Russia, but that's me editorializing. Finally, user at Bidatsi, quote, Hannibal Lecter to launch initiative to set global meat labeling rules, end quote. This might not sound like a big deal to you, but let me explain

that it could end up being a very big deal indeed. Google has debuted what it is calling the business application platform, which includes tools for API management, no code app development, process automation, and business analytics. So in essence, Google is proposing this. Why hire developers, why have an entire IT department, maybe in the future, most businesses can do their development and ops without much technical nouse through a suite of programs like these, quoting Silicon Angle. Google said it aims to create more consistent ways for users to access services, data, and functionality via APIs while disguising the complexity behind a no-code platform. No-code app development enables non-technical users to build data-driven

applications quickly without using a programming language. The business application platform will also include API management technology from ApiG Inc., which the search giant acquired four years ago. The company said it will add new features that leverage Google Cloud, hybrid and multi-cloud architectures, artificial intelligence and machine learning development platforms, lifecycle management security, and productivity slash collaboration tools. With the release of API Gateway to beta testing mode, Google Cloud users get a fully managed platform for building, securing, and monitoring APIs for Google Cloud workloads and serverless backends. The Gateway lets developers secure.

and manage their APIs built on Google's compute engine, Kubernetes engine, app engine, and serverless backends without the need to write endpoint code or specify infrastructure configuration or scaling. Serverless computing is one of the hottest concepts in cloud infrastructure at the moment. It enables developers to build applications that run services automatically without the overhead of provisioning infrastructure. Serverless applications are said to be faster, more flexible, and less expensive to run because of their as-needed use of compute resources. Built on the Envoy Edge and Service Proxy, the API Gateway includes authentication, key validation, and rate limiting, and is available on both a consumption-based and tiered pricing basis.

Xavier called the service very high volume. It can process millions of API calls. Customers can also monitor consumption of APIs and build service-level agreements around these metrics. Google also announced early access to app sheet automation, which enables non-technical users to automate processes at large scale, among the workflows that can be automated with no-esuit. code tools are inventory tracking, driver dispatch, safety inspections, team approvals, project management collaboration, and telehealth, Google said, end quote. So I'm not sure how much we've talked about it on the show up to this point, but the whole no code space is red hot. No code is the idea that programlets can be created that are simple enough that they can be deployed like glorified spreadsheets, no need for knowledge of programming languages, coding, any of that stuff.

So this is an interesting play. What if one day most businesses could turn to a Google suite of services to do most of the things they typically hire software engineers to do? While AWS and Microsoft are offering a suite of services, here it looks like Google wants to offer a suite of solutions in the old-school IBM sense of the word. Quote, we are confident the new category of business application platforms will help empower both technical and line of business developers with the core ability to create and extend applications. build and automate workflows and connect and modernize applications, Google Notes in today's announcement. This was totally off my radar because this isn't a space I know super well, but apparently there's been a sort of apocalypse in the world of pirated content lately. There has apparently been a historic drop in pirated content in terms of volume over these

last few weeks after the U.S. government busted a bunch of pirates, especially a community known as Sparks, taking down in the wake, dozens of top pirated. pirating sites, quoting Torret freak. Every day, millions of people download or stream pirated content including movies, TV shows, games, MP3s, and books. Many of these files originate from a small and tightly organized community, commonly known as the scene, which is made up of dozens of smaller release groups. These groups tend to operate in the shadows with little or no public profile. At least, that's what the unwritten rules dictate. That's for good reason, as the people involved risk high prison sentences when caught. It's very rare for seen group members to get busted,

but last week the U.S. government claimed a major victory. With help from international law enforcement partners, several raids and arrests were carried out with the Sparks Group at the center of it all. The first reports on a possible law enforcement action trickled in last Tuesday, and a day later, the U.S. Department of Justice confirmed that three people had been indicted. Based on the copyright infringement, conspiracy charges, all face long sentences. The main defendants were hit the hardest, but the effect of last week's actions are much broader. As mentioned earlier, dozens of top sites are believed to be taken down in the raids, and many more halted their operations as a precaution. In piracy circles, people regularly bring up the hydra, a mythical multi-headed

creature that can easily regenerate when its head is chopped off. However, last week's bus are also reminiscent of another in Greek mythology, Achilles heel, end quote. Yes, one is tempted to say, you can never really defeat piracy, only temporarily inconvenience it, it's whack-a-mole, the pirates will pop back up somewhere else. But if you look at the piece that I linked to for this segment in some categories of piracy where there were maybe 750 new releases of pirated content mere weeks ago. In recent weeks, there have been maybe dozens. Does look like some important or at least prolific pirates were hit. Finally, today, it is already a long show today, but there's no way I can resist doing this segment.

Late Friday, everyone from the Financial Times to the Wall Street Journal to Bloomberg were reporting, you know that whole stratospheric tech rally this summer on the stock market? And you know how that suddenly seemed to pop in the middle of last week with all sorts of big tech companies seeing their stocks drop as much as 10 or 15%. Yeah, well, what could be more of a 2020 story than what if I told you Masasan was behind it all? Multiple sources are blaming an unusually large purchasing of call options by SoftBank over the past months for fueling the tech stock rally. And those options expiring, I guess, are the reason for the recent decline in stocks like Apple, Tesla, and others. Check out this quote.

These are some of the biggest trades I've seen in 20 years of doing this, said one derivatives focused U.S. hedge fund manager. The flow is huge, end quote. And quoting from the Wall Street Journal. Fulatory filing shows SoftBank bought nearly $4 billion of shares in tech giants such as Amazon, Microsoft and Netflix this spring, plus a stake in Tesla. Not included in those disclosures is the massive options trade, which is built to pay off if the stock market rises to a certain level and then lock-in gains, the people said. SoftBank bought a roughly equal amount, so another $4 billion, of call options tied to those same underlying shares that it bought, as well as on other names, according to people familiar with the matter. It also sold call options at far higher prices.

This allows SoftBank to profit from a near-term run-up in stocks and then reap those profits by unloading its position to willing counterparties. Investors pay a small premium to buy options, giving them exposure to a much larger, notional amount of shares. In SoftBank's case, the roughly $4 billion in options generated in exposure of around $50 billion, according to the people familiar with the matter. A handful of massive tech stocks, Apple, Microsoft, Amazon, Facebook, and Google owner Alphabet make up about a quarter of the S&P 500 index. They take the broader stock market with them when they rise or fall. Their dramatic rally in recent weeks has pushed the stock market to new highs, but raised concerns of a dangerous unwind that could drag the market down with them. The possibility of such an unwind came into focus Friday as the tech-heavy NASDAQ fell sharply for the second day, dropping 1.3% and capping off its worst week since March.

Traders say the market dynamics could be partially explained by investments like soft banks. Options activity has been so robust that traders have said it has helped intensify the rally in tech stocks and unleashed unusual dynamics across the markets. Softbanks' options positions were reported earlier by the Financial Times. Options strategies were at play in gains in stocks like Salesforce, which jumped 26% in one day after its earnings, traders said. Options are contracts that allow investors to buy ourselves. shares at a specific price later in time. Call options confer the right to buy while puts give the right to sell. Traders can tap these derivatives contracts to make directional bets on stocks or hedge

their portfolios, end quote. Yes, lots of jokes about Massasson having gone full Robin Hood. As the rumor going around Wall Street all summer was that it was the kids on Robin Hood trading all those crazy options that was at least partially responsible for some of the stock market craziness. I think we talked about that maybe a month ago. You know the Margins newsletter? It's one of my favorite newsletters, and they were literally losing their S this weekend over this news. They actually think that this might explain some of what was going on in the stock market. Link to their most recent newsletter in the show notes. Let me introduce you to the concept of a gamma meltup. Or actually, I can't explain it because I don't understand it. So read the newsletter because

they have a Wall Street background and they can give you the best sort of layman's explanation probably possible. Quote, try to understand the self-reinforcing aspects of a strategy like as follows. SoftBank buys far more call options than the market is used to handling. The market makers have now sold far more call options than they're used to and need to hedge, meaning they're going to be buying that underlying stock. That pushes the price up, meaning they will need to buy even more of that stock to hedge. And let's not forget the COVID-plus software will eat the world stories, which are very true.

Does anyone want to bet against Apple or Tesla or Amazon or Zoom or Shopify? What other stock are you going to buy? This explains how a giant company like Zoom goes up 40% in just one day. There's natural buying pressure from people excited about those amazing earnings, but these distorted market dynamics create a buying frenzy, as the market makers who are exposed to these runups have to buy more and more and more of the stock to keep their exposure down. They buy more stock to hedge, which triggers algorithms somewhere else to buy more of that stock and on and on and on. Regular humans who just want to buy

stocks get alerts about an amazing stock and also buy that stock, which makes the market maker who originally sold the options, need to buy even more stock to hedge. That's the gamma meltup. Suddenly SoftBank is showing profits of $4 billion in just two months on an initial investment of $4 billion, a 63,000% internal rate of return. To anyone from outside of finance, it must sound ridiculous that this is how the very capital markets that handle your retirement money function, and as I write it, it kind of is, end quote. Kind of is. No, is is is crazy. Yes, as I said at the beginning, by the way, the official Apple event, where we expect the new iPhones and Apple watches to be revealed, has been announced by Apple to be happening September 15th at 10 a.m. Pacific.

It will be a virtual event, of course, and sorry, you Kremlinologists or Kupertinoologists or whatever. There is no clever tagline on the invitation from Apple, so none of us can take wild guesses at the theme for this event. By the way, for the first time ever, I got one of those Apple invite emails that all the big tech journalists outlets seem to get every year. It was addressed directly to me, my email address. So unless everyone out there got one, I'm pretty chuffed that Apple PR suddenly takes this podcast seriously. We'll be even more chuffed if they send me one of these invites when these events can happen in person again. Maybe next year. Nonetheless, thank you, Apple. Talk to you tomorrow.