The a16z Show - a16z Podcast: So Where Are We on the 'S-curve' for PC Devices?

Episode Date: October 29, 2016

There have been a number of new device announcements this past month -- from Google’s new Pixel phone (the first time they made their own phone on the hardware side as well) to more recently, Apple���s announcements around a new Macbook Pro and innovations in touch (including a Touchbar that replaces function keys and bringing TouchID to Macs); and then Microsoft, which among other things announced a new Surface Studio -- an all-in-one touchscreen desktop PC. How do these change the future of work? Turns out, even seemingly small interface improvements could have significant consequences for user behavior. Just look at touch. More broadly, though, what happens when a software maker becomes a hardware maker? Or when we're in the middle of an architecture shift, as we are right now with x86 to ARM processors in mobile (and beyond)? It's all about where you're at on the "S-curve" of innovation (a concept first coined by Gabriel Tarde and expanded on Everett Rogers in his theory of innovation diffusion). And sometimes, the best is the last... But how can we tell where something is on that curve? The right comparisons matter here, and a16z's Benedict Evans and board partner Steven Sinofsky try to make them in this episode of the podcast! Stay Updated:Find a16z on YouTube: YouTubeFind a16z on XFind a16z on LinkedInListen to the a16z Show on SpotifyListen to the a16z Show on Apple PodcastsFollow our host: https://twitter.com/eriktorenberg Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Hi, everyone, welcome to the A6 and Z podcast. Today is another one of our hallway conversations, and no seriously, this actually started off as a conversation in the hallway between Benedict Evans and A6 and Z board partner, Steven Sinovsky, and in true hallway convo style, where we riff off a theme, in this podcast, just the two of them talk about all the recent news in the industry around devices, ecosystems, and architectures. Besides, for example, Google's new pixel phone, which is especially notable as a first phone made by them on the hardware side as well. Apple had a number of announcements recently around a new MacBook Pro and innovations in touch, and then Microsoft, which among other things announced a new Surface Studio, an all-in-one touchscreen desktop PC.

Benedict and Stephen first talk about the announcements and then talk more broadly about what it all means in terms of S-curves and innovation, covering everything from the X-86 to arm processor shift to ecosystem fragmentation to the role of touch and interface, and finally how it all changes work. Well, we were talking about what an exciting week it was for people who like PCs, that for the first time, in a long time, there's new PCs and also just the one after another Microsoft Apple. And like, is this a changing of the guard over who's taking over PC leadership and design? Even talking about did Microsoft do better ads for their devices than Apple did for their devices, even though Apple sort of created the metaphor for doing the sleek ID walk-through? what's on your mind? Well, there's a bunch of things.

I mean, Apple announced a upgrade to the laptops that people have been waiting for, and it's an upgrade. It's another speed bump with a new design with this interesting touchbar thing on it. Microsoft, in the other hand, have done this like, oh my God, amazing, sexy, big,

color touchscreen thing that flies around in your hands and so on. What's also in my mind, I think actually, which is interesting, is the Google Pixel. And I think it's as interesting to talk about Microsoft,

and Google getting into the hardware business as it is to compare the pixel with the iPhone and to compare the surface with the Mac because you've got these two different things. You've got these ecosystems and you've got these operating system providers moving into a hardware ecosystem. Then you've also got the state of the PC ecosystem

and the state of the smartphone ecosystem and the kind of products that are coming out of that. So you've got those two different strands to think about. I think there's a third in there too, which is where people are writing software. Yes. Like I think there's one sort of ecosystem that has these three spinning gears

that all have to spin at a good velocity for the whole thing to be healthy. I'm super interested, of course, in the pixel comparison, pixel plus Android and then the Windows devices plus the OS there. Because they're very similar

on the outside, but very different in that the ecosystem around Android is just so broad with so many players. I mean, it looks like PCs looked like 15 years ago. But now there's such a consolidation in the PC space.

Yeah, it's interesting. I wrote a piece in the spring saying, sort of where is the Dell of Android? It's wondering how that market will evolve. I mean, so here's the thing. You have this huge and very vibrant ecosystem for making Android phones. At the high end, it struggles to compete with the iPhone. There are some companies that do OK against the iPhone, but Apple's got 650 million iPhone users. But then it has a couple of systemic issues within it. And the really obvious one is fragmentation, both fragmentation of the operating system. No one gets updates, but also fragmentation.

of the hardware, which is less obvious, perhaps more important, which is that you've got 2 or 3,000 different devices, just as you have 2 or 3,000 different PCs and for much the same reasons, which makes it challenging if you want to do stuff around like kind of low-level graphics and super high performance. Or anything in software, really. Yeah, but in particular, it seems to come even more to the fore

as we start thinking about VR, because you can get Facebook Messenger to work on any Android phone, whether you can get Daydream to work, even on any high-end Android phone is kind of an open question. And so Google comes out, into this very rich, very vibrant, still kind of growing ecosystem with a quite high-end phone. And they previously had the Nexus, but they never tried to sell them. So that didn't really count. You know, that was a really kind of low-volume product. Now it feels like they're at least

talking about going out and trying to push the pixel quite hard. And so actually competing with their OEMs, who you could argue don't have anywhere else to go because Windows phone is now kind of shrunk away. But Google's kind of going out into the phone business. And you think, well, why is it that they're choosing to do that? What is it that's on a pixel phone that I can't get on another Android phone, is Google going to put stuff on this phone that they're not going to let the other Android companies have? And why would they do that? Why would you have stuff on a pixel? Because what is it that Google, what is Google about? Is it the hardware company or they search company? Right. And it's even sneakier than that because in the dynamic

of Google supporting the broad set of OEMs, that's an implicit thing. Like the OEMs are going to just think they're going to do that. Yeah. And, but, But of course, they're also businesses and they can't just stop making stuff. Yeah. But it becomes very quickly an adversarial relationship where, where like every time Google, because imagine, it's not just, it's just the mere presence of this cloud over this whole conversation. Because Google is showing up saying we'd love you to be able to be updated. We'd love you to be able to surface this thing.

And we really don't want you to do kind of crapware. Oh, and by the way, I know you're thinking we're going to do some secret thing that we're going to spring on you right before you launch a device. but we're not going to talk about it and you're not going to really accuse us. And I've never spoken to the guys who work on that honestly. Right. Yeah. Oh, yeah, we have a wall. Like, we have a big wall between the people who build the software and the people who build a hardware, which for a long time was a thing that I had to navigate. And so the problem is that ecosystems are fundamentally about a relationship.

And it goes all the way up and down the chain because you start with developers and the relationship to the platform. then you have the platform of software to the platform of hardware. Then you have even the ecosystem of the OEMs with all of their suppliers. And so at some point, you know, you start to worry, is there going to be like a Samsung arm chip in a Google pixel device in the future that is only theirs first? And that's the high-end one.

And so this is a very precarious spot. Well, I suppose one of the things I wonder is like, is this about Google trying to fix something in the Android ecosystem? that isn't being done by the existing OEMs. Either high-end phone, it's actually having held one for a week. It doesn't feel that premium actually. It doesn't, yeah. I actually always felt that the Nokia Windows phones

felt more premium than any premium Android phone. So are they trying to fix something in the ecosystem, or are they trying to make money? And of course they'll try and make money anyway. But is the purpose of this to add another revenue line? Is the purpose of this to give people in the Android team something to do because they're there? Is the purpose of this to fix something in the ecosystem?

Right. Well, and of course, this is the same applies across any time that a big software maker tries to make hardware while supporting an ecosystem is you can always drive the top line revenue because the devices are expensive. It's $900 and you multiply that by a few million and, woo, it's a big number. But the margins are very, very difficult. And what's really hard is the software companies, their room for margin is much more difficult, more difficult because they are used to these 90, 80, margins and they're very expensive providers. Like if you're the person building the software enhancements that go on an HT or an LG or something, you're not paid the same as like a Google engineer. And so your ability to compete on a margin basis is always going to be extremely limited. So then it's like, are they just going for the top line? And to me, the challenge is always like what is your core purpose and how far will you take it? And so I always think about the example of like it's the Dodge Viper.

They recognize they couldn't really make money making cars at that low volume. But boy, if you could have a TV show that said Dodge Viper, and then every time you see it, it's basically the same as if you were spending $300,000 for a minute commercial in the middle of something. And so it is literally out of your ad budget when you think of it. Yeah, it's interesting. I mean, then you look at the Surface Studio, which starts at $3,000 for basically something with laptop with mobile chips in it. And then it goes up to, is it $4,000 or even $5,000 for the fully loaded one? It's like $4,200, which gamers would point out, or someone looking at cat scans or MRIs

would point out that if you get a super high-end 4K monitor plus a box with an external graphics card, you're up at that amount anyway, and it just isn't as... Yeah, it costs what it costs. Yeah, it's not an unreasonable price for what you're getting. No, it's not. But it's interesting. So you've got Microsoft, you've got Google getting into its own hardware ecosystem. I mean, to wind back, I've always thought that Google is basically a reach company,

and everything is about getting reach, either to get stuff in or to surface the products out. And so I look at this and I think, so what is the reach problem that this is solving? Is the reach problem here that they weren't able to get their services out in a timely way onto Android phones? Well, 95% of devices have got GMS, so it doesn't feel like that's the problem. Is the reach problem that too many people were buying iPhones, and they felt that no one was making a high-end Android phone, and so they had to make a high-end Android phone. And if that upset Samsung, well, that's so be it.

It feels like maybe that's the answer. And then there's the other point, which is maybe it's a fragmentation, and the fragmentation is a problem for VR. And they're trying to get ahead of that. But that's a bit more speculative. Yeah. To me, I think, and like now I'm speaking personally, because there is a reach problem when we were doing surface,

like one of the reach problems was I couldn't do a press briefing with somebody that was running a Windows laptop. The voice of all of your products, whether it's the press or just let's refer to it as elites, the CEOs of the world, whatever, they were not running the very product we were trying to sell them or show them. And I think the Google's problem is,

you can't talk about Android to anyone who uses it. And so all the press... And it's the first thing anybody does when they leave Google in the valley is buy an iPhone. Right. And actually, they have a hard time,

even internally, like where the people use iPhones and stuff, and particularly as you like spread out beyond the core Googleplex people and you just go to the subsidiaries and all around the world, iMessage is real and they want to communicate with their friends and and stuff. And so I do think that it's super interesting in that regard. We touched on price a little bit.

I was fascinated by the fact that there were a lot of people on Twitter. If you were a Windows fan, you said, look how expensive the new MacBook Pro is. And if you were a Mac fan, you were like, good Lord, $4,200 for a computer. And there are even fake ads for all of them now. There's like the Apple ad that says new MacBook, you will never afford it. And then there's a converse for the Windows one. with exclamation noise. And the truth is, where we are on the S-curve in the PC world, this is how much PCs are just going to cost. There's no reason to be cheap.

Yeah, so the S-curve, I mean, this is an interesting conversation as well. And the thing that I got a lot of flat for on Twitter was actually just talking about S-curds. And so we should talk about what we actually mean here, which is that, you know, the innovation on any technology product follows an S-curb. You know, you're digging around in the foundations and it's not working yet, and it's flat, and then suddenly everything starts working and it goes up, and then it starts slowing down again. And, you know, anybody looking at a PC, including Max, as Max of PCs, but anybody looking at a personal computer. An Intel-based computer.

Yeah, an Intel-based computer. Now, you know perfectly well that it was getting faster, way quicker 15 and 20 years ago than it is now. And actually, if you buy a new computer, it's really hard to tell the difference between a new one and one, 10 years. It's from five years ago unless you're doing, like, 3D or video editing or something. Well, in fact, all of the new devices that were announced this week are running components at least a year old. and in some cases two years old. The graphics on the surface are the last generation of video, the CPUs on Intel or the, I mean on the MacBooks are the old ones. And you can't tell.

Yeah, so you've got this slowing innovation curve because you've basically done as much as you can do and you can't think of anything else to do. And I wrote a blog post about this in the summer talking about propeller planes and jets. And so you look in like the late 40s and early 50s, you've got these four-engine propeller powered airliners and they're beautiful things. and they work really well and everything's done perfectly. And you've done everything you can do to a piston engine. You can't make the piston engine any better than this. And then jets come along. And like the first jets are not as good,

but this is you're on a whole new curve. You're on an S curve that's going to go a lot higher than piston engines wherever going to take you. And I think that's sort of where we are with mobile, quote, quote, with mobile and with PC now, that we have two curves. And the mobile curve is still accelerating upwards and the PC curve is kind of flattened out.

And so therefore the sort of the point I was making is that basically what we've seen is Apple with the new Macbooks, basically moving a little bit further along that flattened S curve. I'm saying, okay, well, you know, we can do a little bit more, we can make them a bit thinner, we can move to the new ports, we've got this interesting touch bar thing, which we can talk about later. We're basically iterating on the old model. Meanwhile, we have a new S-curve, which is ARM iOS, touch, modern operating system,

iPad, iPhone, of which we now have 900 million users. There's only one and a half billion PCs on Earth and Apple has 900 million iOS devices out there. And on a quarterly basis, Apple sells about the same number of... Apple sells the same number of devices as there are PCs sold. Yep. But that's one of the many companies on the arm curve versus all of them. Yeah, the 86 curve.

Exactly. And, you know, people quibble about the replacement cycle, but that's not really the point. You know, here is this new curve. And this new curve is accelerating past the old curve in exactly the same way that the PC curve accelerated past the main frame in the mini-computer curve. And so for Apple, the place where you put the real reimagining of what your whole experience is is on the iPhone and the iPad. The problem for Microsoft is Microsoft missed that. You said that and I asked if there was a grade for effort. Yeah, yeah. It's not like

you didn't try. I tried really hard. So I had, hey, I had an iPad, you know, I had, I bought an compact IPAC. I had an RT surface. Yeah, I had a Lumia, I had a Lumia 800, which was one of the loveliest phone has ever made. But for all of the post-mortems, Microsoft missed mobile, or didn't get, didn't drop out of mobile, however you want to phrase it. Mobile defined as Arm. Mobile defamed as Arm, iOS, Android, Unix-based, you can argue about the operating system, but Arm and Mobile and Touch is the new generation of computing, and Microsoft basically failed to make headware. And that has written off the Nokia acquisition. Microsoft is not doing phones anymore. And so Microsoft quite sensibly turned around and said, okay, what do we do

about this, well, we've got to try and add some of this stuff to the old platform. So we add touch and we try and make phones. We give up, more or else give up on making phones, but we add touch to Windows. Well, the timing is a little off there. So let me try that. So you have some first-time knowledge of this. And it's tricky to talk about because, you know, these are like I love the new products. I'm obviously going to go buy a new surface and it'll replace the all-in-one Dell that I have. But, you know, if you look at iOS, like the thing that was most innovative to me about iOS is that they, I sat there in the launch of, of the first iPhone and Jobs, student stage, he says the beautiful thing about this is it's really just the Mac operating system under the,

under the covers. And he was being literally true. And it turns out they backed away from saying that because it was just so confusing to everybody because you ask, oh, then can I run Mac Word on it? And like, and so, but from a technology point of view, of course you're going to do that because there are so many parts of an operating system that don't appear that are going to be the same no matter what you do, threading and tasking. But there were tons that they had to redo. Like graphics was completely different than it was on the X86 and working with memory and working with storage and the kind of peripherals and sensors.

None of that existed. So what we did is we put all those on the windows side and trying to do the same thing. But what happened to us is that the broad ecosystem of people just couldn't react well. to having the Windows product change. Like, the question always became, well, we should have just done a whole separate thing. Yeah, well, so this is... And that's like an innovator's dilemma, a problem.

Well, this is the question now is, well, Apple should add touch to the Mac. Right. And, you know, the answer is, well, you know, that was hard and painful. I'm sure you wouldn't object to me saying Windows 8 was painful. You know, actually would object, but, you know... Well, it was a hard thing to do.

It was hard to do... To go from an operating system, it was basically conceived for keyboard and mouse and placing touch onto that has challenges. And having two operating systems, one for a keyboard and mouse and one for a touch has challenges and there's trade-offs in each of those. And of course, for me personally, like, there's always just that subtlety of, like, how are you going to get to the future and what was the right path?

And, you know, I certainly firmly believe, and we had already experienced this once at Microsoft where we ran DOS programs on a GUI. And you just, like, started up in a window. And people had all of the same complaints back then. Like, it's so confusing. There's a command window for Word Perfect. And then there's this fancy version of Excel that, does Windows and mouse, and you can't get data between, like, these confusing states, they exist.

And just to be super clear about it, you hear all the same things if you use, like, a Mac and you use iOS. Like, how do you sign a PDF on iOS? And where can I get to my files that are in a folder? There's no, there's no finder or explorer on an iOS device. It's super commuter because these transitions, there is no smooth. Yeah. So there's a kind of, kind of a step function discontinuity.

There's a kind of a clear sort of almost kind of debilatize it. You have this kind of platform transition. and it's a transition from the x86 chip architecture to arm and that has a big power implication. And sensors and connectivity. And then there's all the sensors and connectivity. There is an fundamental interface transition from something that's based on a mouse and a keyboard

to something that's based on touch. And adding touch to a mouse and keyboard interface is hard and creating a new interface is hard. Right. And Microsoft went one way and Apple went the other way because Apple always likes to kind of make a break and do a new thing. Well, and they had nothing to lose.

Yeah, exactly. And we had a lot to lose. But what I'm kind of getting at is that the arm touch in thing starts in a little phone. Right. But it's not about a little phone. Just as the PC thing starts as his little thing on a desk. And you're like, but I've got 100,000 people and I've got a mainframe. And how the hell can I run my business on that little thing?

But that's just where it starts. And now everything is on PC. Yeah. And I could go on and on. And there's no point in reliving the history, you know, because it's such, there's not like it's not going to happen to anyone again anytime soon. And if it does, it'll play out differently. But there is that, you know, it is, it is that very tricky thing of, of like, what were you

thinking at the time versus what could you do versus what you could say. Yeah. And, like, you know, it's very difficult if you're a big, successful organization to stand up and tell the outside world, the thing you love and the thing that's all the business is not the thing we're going to worry about anymore. And you can't do that. Like, that's the, that is literally the innovator's dilemma. we were able at the time to build a whole lot of software and release it, which itself was an accomplishment.

I'm never going to get tired of just analyzing it and thinking about it because I do think it's a very interesting thing. But the thing that we have to make sure folks understand that we're coming from is really just PCs are going to get super expensive now. Like everything about them is it's just like buying a mainframe. Like today, if you're a big insurance company running mainframe software, you can hire programmers, you can get new features. it's just 10 times as expensive as it was a long time ago because that's what happens at this point of the S curve. And so people who are worried about the price, that's like the price now. And because you were saying earlier,

if you want a cheap PC buy a phone. Yeah, exactly. Well, this is the point. We go through this transition where the X-86, Windows and mouse and keyboard interface, is the old way of doing things, and the arm touch interface is a new way of doing things. And one of those is on the flat part of the S-curve,

is in the other words, on the up part of the S-curve. And so what Apple is doing is they're optimizing the one that's on the flat part of the curve, sustaining innovation, Clay Christensen would say. And then they're trying to drive the experience forward in new ways successfully or not, but that's where the innovation is on the one that's gone the upward part of the curve. And so it sort of makes me off Apple has had, I've been able to draw on my iPad for what, a year and a half, with a pen. Whereas for Microsoft, because Microsoft didn't have that thing that was going on the up part of the curve,

for all these stuff for reasons we talked about. So Microsoft is optimizing the one that's on the flat part of the curve. And so you get this beautiful propeller powered plane in the form of the Surface Pro. And that thing is going to be a great, and the Surface in general, and now the Surface Studio. And so you've got these kind of points of comparison,

which are kind of the wrong comparisons, or which comparisons are we making here? I remember what we were saying before. It's as interesting to look at the pixel and the surface as it is to look at the pixel versus the iPhone and the Surface versus a Mac, because you've got operating system providers getting into high, hardware. But it's also, should you look at the Surface Pro versus the iPad, or should you be

looking at the Surface versus the Mac? Because those are actually the places where people are putting the innovation. Apple doesn't think that the Mac is the place where all the gross is going to come from. It's about the phone and the tablet. Hey, let's, we have to talk, we have to touch on touchbar. Yes. Because I thought at first, when the rumors happened, I was really down on it. And then I got really excited when I saw it, Mostly because of the emoji part. Yeah, I was thinking of doing a flowchart of which things will Stephen love and which things will Stephen hate. Well, you know, because I'm very, I definitely am on the downside of, like, extra gadgets and widgets and stuff.

Inventing your input methods. Well, just in terms of just like it looks so much like fins on a car or just trying too hard. I mean, because we've tried, like, these little screens, they've had them forever. But actually, you can finally make one. Like, that's a super interesting thing. Well, this is a... So it's actually... It's an Apple Watch.

So the actual technology underneath is an OLED screen, and the chip that's driving it, apparently, is actually Apple Watch, basically. That's how it's being done. It's also interesting, incidentally, that there's touch ID there, but we can come back to that. Yeah, yeah.

So I was at the demo event yesterday. It's a little bit hard to tell because we've got these super high spotlights, but it's basically, it's matte, so it feels touching, it feels like touching your touchpad on your laptop. It doesn't have haptic feedback, so it doesn't click when you touch it,

which I would imagine will come next. but it does look like part of the keyboard. So it's not like glowing or glaring brightly. And it's very fast and very smooth. And I played with it for, you know, two minutes. It's instantaneous. You switch out the button switch. There is an escape key.

You can always have an escape key. Breathe, breathe. And it's sort of, so I, so here's the thing I was thinking about this, which is like, it comes back to the S-Cub, which is like, what can you, you're sitting and looking at this product and you're thinking about interesting sort of, what should we change here?

Like, why have we got these 14 keys at the top of the keyboard? Which Steve Jobs hated, hated, hated, hated. But why have we got them there? And we keep changing what's on them every now and then. And it's like, you've got to memorize what they are. And, like, you're in this app, therefore you can do FN and that button and something will happen. And you've memorized them.

And, like, why are they there? And if we were to turn them into software, what could we do? And you couldn't change the whole keyboard into software because you wouldn't have the, you know, you would be harder to type on it, but you don't type on those keys. So what? You punch them.

You punch them. So what could we put there? And I think it's almost that simple. You know, this is not like inventing fundamental new interaction paradigms, like putting a dial on the screen or a pen. It's like this is an interesting incremental evolution to a piece of like a legacy component of your computer. And it works super well in that regard for a key ecosystem reason,

which is basically, you know, the idea that people, the cynical people are saying, oh, this is Apple, like their last-ditch effort to refuse to put Touch in Mac OS. And so the fallacy in that argument is that there are all of these Mac developers, or let's just call them X-86 developers that are either on OS10 or on Win 32, that are sitting there going, what's the best way for us to completely rewrite the interaction model for our application? Because they're actually no one doing that. All of those are on the back of their S-cur. and they're in sustain mode.

And the last thing they're going to do is rewrite them, which is something, frankly, back in the Windows 8 days, we always knew was the case. And the focus we needed was on new kinds of applications. And so Apple is big enough

and people like Photoshop and other big giant ISPs are all able to, like, throw a few pieces, a few resources. And that's what I'm fascinated by because even their design guidelines, which I tweeted last night,

I find fascinating. Because to me, if it were beginning of the S-curve, like I'd be looking at this going, oh my gosh, this becomes the whole UI. Like, you could really start to see. And because we did the ribbon way back in office as a way to just basically do the same thing. It was just on the screen.

Yeah. And except Apple is, they're so cognizant of the fact that this is sort of an incremental innovation that they actually tell you not to try to replace the UI of your app with it. Yeah, don't do anything revolutionary with it. Well, they say, like, don't expose functionality solely on the touch bar. So basically the touch bar is completely redundant. with the product, you know, and provide controls. But that's exactly the same as saying don't do things that are only keyboard shortcuts.

Right, right. It makes total sense. It just, it points out that, like, they're fully aware that there's no developer who's waiting to rewrite their product in this. Yes. So therefore, you want to constrain it so they don't try. Yeah. And so this is one, this is a nice, interesting, it's an interesting, potentially useful,

potentially not, incremental improvement to a MacBook. And the MacBook isn't changing what it is. the MacBook has been is at the top of the S-Curve. This is better propellers on your Lockheed constellation. Right. And so all of these kinds of changes, that's why I'm always was skeptical of like hardware gizmos because there were never any developers. So this is a problem Samsung has always had.

Right. They announced this new thing and a new Samsung phone, and Android developers are like, well, that's one of 850 phones that my users have got. And I wouldn't be able to find those users. And then plus, you're going to have to fix it and no one will get the updates. And so it's all sort of hopeless. And so that's, you know, that's why these. ecosystems. First, you need components that are moving very quickly, then you need to write software,

and then you need developers to use it. So this software point, this is the crucial thing, and I've gone and watched the Microsoft launch event video three times now, and I'm sort of sitting and puzzling and thinking, like, I don't draw. In fact, I can't draw. I just like the way you say draw. Because I think like draw. Okay. Well, my son's starting to do that now. It's terrible. So here's the thing. So when Apple launched the iPad, or indeed they launch the phone, They didn't launch the iPad and show you pinching on photos and drawing on it. And then say, now you plug in a mouse in order to do your email. They proposed touch is a completely new way of doing everything on the device,

and everything on the device had to be written around that. Microsoft launched this new Surface Studio device. They didn't show me how this is better for doing my email. They showed me I can draw on my email. I can draw on that word document if I was going to print something out, and I don't think I printed anything out this year except for like doing taxes. But professionally I haven't printed anything out this year.

But I can write on that word document. Okay, but can I use the pen to create documents in completely new ways? They didn't show me that. Can I use the pen to handle my emails in completely different ways? No, they didn't show me that. What they showed me is if I'm a professional illustrator and I've been drawing since I'm 10

and I can produce beautiful drawings, this is a great new tool for me. Great. There's only 7 million people subscribe I've been to Creative Cloud, and there's a one and a half billion PCs out there. So what is the use case for everybody else? And I actually had exactly the same point around the Apple Pencil. It's a beautiful product if I do every day.

I don't. And so I look at this thing, and I'm like, okay, this is a, it's great, it's a beautiful product, it's very clever, it's a great demo. If I bought that, would I ever use the pencil? Would I ever use that dial? Here's an example for me of how why people have to sort of wrap themselves around the fact that work is changing. Because too many people,

especially in the Twitter conversations that we're part of, it's like they're programmers or they're people that sit in front of their PC. Like, the average employee at a company now is spending less than half their time at a desk. And when you start looking at the time that they're spending on working,

like it's all shifting to mobile. An example that I love is that there's something like 25 million salespeople in the United States. And lots of different ways to... Okay, so if you know, there's 25 million salespeople, there are 7 million.

subscribers to Adobe Creative Cloud. Right. That's another one to look at. But even if you talk to designers, like that profession is changing because you're on site, you're using iPads to do presentations and demos. You're, you know, there are brand new products like those that were investors in that are, you know, web and iOS compatible for design. But the interesting thing is that, like, if you're a company like Salesforce, building

software for 25 million people, you know, 10 years ago, those 25 million people would bunch up all their work. They'd be on the train and they would do all their email and they would do all of their, they're catching up in CRM and stuff on their laptop offline, and they'd sync it, or they're certainly going to show up with a customer with a laptop and plug it into a VGA port and stuff. But those people now, they're highly mobile. They're sitting there, they're doing everything their phone. Benioff talks about running the whole company from his phone.

And so this whole class of work. Well, so one of the things that I've kind of talked about in the past is this sort of, so there's two distinctions here. But the first is there is this core group of people who live in Photoshop or live in Excel or live in Xcode or live in whatever. That is add all of those people up, you get to maybe 50 million people out of one and a half billion PCs, all of them. Like all the people who live in Excel, all the CPAs, everybody you give. Maybe it's 100. But there's one and a half billion PCs out there.

What you then have is you have a whole bunch of people who every week or every two weeks do their expenses in Excel. And they say, I need a PC. or, you know, that's a true word putting it. Every two weeks, they pull a bunch of data out of SAP into a CSV. They put the CSV into Excel and they make charts. They put the charts into PowerPoint. They write bullet points. They email to PowerPoint to everybody.

And so they will tell you that they need PowerPoint, but actually their job is not making PowerPoint. Yeah, yeah. And so that should be a live dashboard. That's dashboard. And so that work, there's this idea that I can't get my worked on on a P on a mobile or on a tablet. That's just for consumption. It's like, well, yeah, maybe 5% of the base that's actually not. literally true. Your actual job cannot be done on this device yet. But then there's everyone else.

And what are all those other people doing on their PCs? Well, like, and the way to think about it is back to the ecosystem and where innovation is. And like, imagine, you know, you're like a dentist, like I was at the dentist this morning and they're basically ripping out their PC-based appointment and records tracking system that they use. And they're putting in a bunch of iPads. The way that you saw restaurants take out point of sale and replace them with iPads connected to open table and things like that. And it all goes to the cloud. Right. And it's not just the cloud. The way I think about it is if where most of these vertical software things come from often, the ones that are the last to change from one platform to another is that there's somebody who works in the field that's a domain expert.

They, in fact, like I visited a bunch of medical records companies and like they're all doctors that now are like, I should do records because I hate the way it works. And if you're going to build that, you're going to go and build that on a mobile platform that's mobile. first that has all of the capabilities. It's sort of like there's no square reader for a PC. And so if you want to do innovative payments on a PC, you're sort of hooking up a USB port and a card reader to a stationary device. So Fred Wilson had a great blog post on this on what would the, I think you actually

used a dentist or a doctor or something, what would the system be? And like 20 years ago it would come on a floppy. Oh, yeah, I missed that. Then it would come on a CD and then it would be on a website. and then it would be on a website that had network effects, and then it would be a network effect, and then you would be using machine learning. But it was like, what would the stuff,

what would you be doing to solve that underlying use case? Right. And that will inexorably move away from PC keyboard mouse. Well, they have, and these things just, they take like 10 years to do it. You know, like the multiple listing service for real estate agents here in the US was, you know, it was very much like a PC-based thing, and then it moved to the web.

And then all of a sudden you have Redfin and Zillow and all of these things that show up that do it in a whole different way. And of course, it makes, you know, and everything is going to make more sense if you move around. What I would say is to wrap up, wherever we are on the S-curve, it was exciting to see new things appear. But I do think it's important, especially for people building stuff, is to just remember that there's always these bursts of excitement as you move down the S-curve. But look at the macro level and how this really impacts, you know, where things are going to be in three or five years. You know, but I never want to take away from the fact that people are working hard and they're doing, you know, really good work, innovative. And that's why it's always such an emotional debate because there are people that are doing AutoCAD today.

And if they got some of these new devices, then AutoCAD gets better tomorrow. And that's a very real thing. It's just that people sometimes lose perspective that a bunch of the chatter in the technology industry are all people planning for three, four, five, or ten years from now as best they can. And most people aren't using AutoCAD or Illustrator. You win. Well, thanks, everybody. This has been another edition of Stephen and Benedict Rambling in the hallway. Great.

Thank you.