Upgrade - 351: Long Hair Is In, Disco Is Back
Episode Date: May 3, 2021Apple had a record-breaking quarter that showed strong growth in all areas of its business, but clouds loom on the horizon. A global semiconductor shortage threatens Mac and iPad sales, the EU ruled t...hat the App Store is anticompetitive, and Apple's court case with Epic Games is about to kick off. Did Tim Cook suggest that Apple is ready to change its policies to avoid even harsher sanctions? And upon further consideration, does Apple Podcasts Subscriptions create another barrier to competition in the App Store?
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from relay fm this is upgrade episode 351 today's show is brought to you by fitbod
hello and text expander my name is mike hurley i am joined by jason snell hello jason snell
hello mike hurley how are you i'm fine and dandy, my friend. We have a Hashtag Snell Talk question
from Ivan. And Ivan wants to know,
Jason, how do you wake your Mac from
sleep? Do you press a specific key on
the keyboard? Do you click a mouse key? What do you
do? It's the one and
only Ivan. I feel like I've gotten this question before.
I feel like I've gotten this before.
At a certain point, we will answer all
of the same questions more than once.
I suppose so.
The answer is I don't.
I guess I do have a laptop now.
I have a MacBook Air, and I press the space bar.
I think that's what I do.
I'm pretty sure that's what I do.
And on my iPad Pro, when it's in the smart keyboard case, I will press the space bar to wake it up, usually.
Yeah, space bar's a good one.
My iMac I don't put to sleep,
although it does have a screensaver,
so eventually I will wake it up,
and that's generally the spacebar.
Spacebar is my go-to,
but I don't generally sleep my iMac.
I start it up every morning,
and I shut it down at night.
Right.
It's a thing I do that apparently lots of people don't do.
Although I was thinking about this.
If my next Mac here at my desk is
Apple Silicon, I was thinking about the fact that Apple Silicon Macs, because they've got the
efficiency cores, there's basically no power nap anymore. They are just capable of running
with their efficiency cores as needed and doing stuff in the background. And I thought,
maybe when I get an Apple Silicon Mac at my desk here, I will consider not shutting it down,
but instead putting it to sleep and seeing how that is. But so many years of dealing with laptops
that would not wake from sleep and having to reboot when things got weird. Having a desktop again as my primary, I just really enjoyed the idea that every day it was fresh
and not running for 40 days in a row
and weird things start to happen and I have to reboot.
And I have to say, it's pretty stable.
I very rarely have to restart my computer during the day
unless there's a software update or something.
What about the potential M1 would maybe change your mind?
Is it because of the lower power draw or something what about the potential m1 would maybe change your mind is it because of the
lower power drawer or something i think well partly but it's also just the idea that it's
designed to run like without because power nap the idea behind power nap was it wakes up
occasionally a little bit does some stuff and goes back to sleep and my understanding is that
with the m1 max it can it can just always be aware.
Well, I guess like an iPad.
Right, exactly.
You don't turn it off, do you?
You just don't turn it off.
Right.
And I think the trick is it's got the low power cores.
So it's designed to be in a mode.
The iPhone and the iPad were always designed to be in a mode where they're on, but only a little bit.
they're on but only a little bit and um and i'm intrigued by having by that feature on my desktop mac that i might just put it to sleep and and see how it goes but um i don't i don't normally do
that now just laptops and ipads and things but spacebar is the answer to ivan's question the
spacebar it's the it's the universal symbol for waking up.
The spacebar.
If you'd like to send in a question to help us open an episode of Upgrade,
just send out a tweet with the hashtag SnowTalk or use question mark SnowTalk in the RelayFM members Discord.
We have some follow-up on Magic Keyboards, don't we, Jason?
Yeah, it's good news.
Now, I feel like we got this right.
We nailed it in the last show,
which was there was a report
that the 12.9 inch Magic Keyboard
for the iPad Pro fifth generation
was coming into existence
because they wouldn't support the old model.
The idea was that all the ones
that have been bought for the 12.9 iPad Pro
for the last year
aren't listed as being supported
by the fifth generation. And there was
this whole kind of, I think rightfully so, hubbub about the idea that that just makes your already
pretty expensive iPad Pro that much more expensive because you're going to have to buy another one of
these things that you just bought because it doesn't work. And it seemed weird because the
new iPad Pro is not particularly large.
We said it's half a millimeter thicker is all.
And so what I said, I think, and I think you agree with me, was this sounds very much like
it fits, but it doesn't really meet Apple's exacting specifications.
Like it would be a little awkward or it wouldn't close quite right, or it wouldn't look quite right. And therefore Apple's going to say that it's not supported,
even though it might be fine. And it turns out that's exactly the case. Apple put out a tech
note last week that said it may not precisely fit when closed, especially when screen protectors are
applied. And so really it's more that Apple thought it was awkward enough that they made an
iteration of the Magic Keyboard that's a little bit more loose fitting, which is probably the
case with the Folio case that I got that doesn't look any bigger, but it probably has a little bit
more give in it for the bigger iPad. And so if you've got a 12.9 inch iPad Pro Magic Keyboard for your 2018 or 2020
iPad Pro, and you are thinking of getting this one, it sounds like it's going to be fine. You're
going to be able to use that case and that keyboard and it'll work fine. It'll just, you know, be not
quite up to Apple's perfect standards. It may be awkward, especially if you've got like a thick
screen protector on it or something like that. We had a smart keyboard show up today. I actually
hadn't thought to unbox it, but it's the newest one. So it's for the fifth generation iPad,
because we ordered one of the new iPads. So I should actually try that out too, to see if it's
any bigger, because they did update that one as well.
They updated all of them.
So I will give it a go on one of the older iPads
so it makes a difference.
This whole thing though to me is like,
why did they wait so long to publish this information?
Yeah, this looks like a goof, honestly.
I know, but like still it took them the best part of a week
to put the tech note together.
Yeah, no i i do
wonder that i think they figured this wasn't an issue because they didn't specifically say it
didn't like it seemed like they just updated the database with a new set of compatibilities and
uh you know it's one of those things where the people everybody's sort of doing their job
but nobody was really thinking of the higher level thing and you're right like there should have been
this is the kind of thing where maybe there should have been like a pr statement that was like no it'll
work it's fine and then the tech note gets updated but instead it was sort of like we just found the
tech note and said i mean who knows i don't know who found the tech note maybe the person who found
the tech note was pointed at it by apple pr i don't honestly know i would assume so um i don't
know there are people who just cruise the tech notes yeah well like steven yeah i don't know. There are people who just cruise the tech notes. Yeah, well, like Stephen.
I don't really know, though, why they didn't just clear this up when the stories came out
last week.
They could have just given a statement to The Verge and said
no, it will work.
It's just not as
tolerant as we'd like, so we updated it.
But you can use your old one.
I mean, we only bought the new Magic Keyboard.
So, yeah. So I ordered an iPad for Adina,
like I said, the 12.9,
and she was using a 2018,
and she prefers the smart keyboard
to the Magic Keyboard.
And so I had to order a new one
because the 2018 had a different camera cut out,
so it won't fit the 2021 2021 uh right they're backward compatible but
not forward compatible exactly because that if you remember that was just it had the one camera
and then the 2020 ipad had the big square one right um it's either that or you take like scissors
and try to cut a hole i'm not gonna do that i'm not gonna do that i mean you know that that keyboard
you know we've had that for many years at this point it was
my original one that i got when i got that 2018 ipad pro we're fine to update it yeah i wanted
to mention i was looking at pricing i didn't order one i did that thing where it's like oh but the 16
gigs of ram we know about now and that's in the one terabyte and two terabyte models and you know
do i want that we don't really know. Is WWDC going to make me more motivated
to have one with more RAM or not?
I don't really know.
And then I priced the one terabyte cellular model.
It's $2,000.
Is that without the keyboard?
Yeah, that's just the iPad.
That's a $2,000 iPad.
And that's not the most expensive one.
That's the one terabyte cellular model.
It's $19.99. That is, yeah, okay yeah okay and the thing is the 256 model is not that it's like 1399 it's like it's
appreciably cheaper and i thought wow this is a lot of money and i don't know if i want that and
i like how much do you really want a theoretical 16 gigs of ram i mean the ram is real but what
you do with it is still a little bit theoretical.
And is this going to be sort of like me
paying a lot of money for specs that will
never, ever, ever actually be used?
I don't know. But what
cured me of my dilemma here is
that the ship dates for all this stuff was
June, like late June.
And
because I didn't get up at five in the morning
because I wasn't sure I really wanted to buy this.
And I thought, one, well, by then we'll know
what is going on with iPadOS
and that'll give me some information about it.
Yeah, but then you'd be way into August.
Right.
And then two, the supply chain,
like Apple's distribution channels are such that I know for a fact that when it says that you can get an iPad Pro in late June via mail, I would bet you serious money that by the end of May, I could just literally walk into my local Apple store and pick one up.
You have this every time, don't you?
I feel like recently we keep having these stories
where you don't go for-
For me once, shame on me.
Yeah, exactly.
You don't go for the launch day
and then just order one for pickup in your local store.
I think you're right there actually for those products.
I think that makes a lot of sense.
There's nothing wrong with ordering one that's way out,
but I would say anybody out there listening
who has ordered one and their ship date is way, way out,
keep your order because you can cancel. Because one of two things will probably happen. One, it may contract, right? It may come closer and you may discover
that your ship date is closer than they originally said. But two, if you live near an Apple store,
they originally said.
But two, if you live near an Apple store,
once these ship,
Apple doesn't put 100% of the models in the online order shipping channel.
They don't.
They put them in Apple stores.
And if you've got Apple stores around,
you may very well find yourself
able to pick one up in an Apple store.
So just something to keep in mind.
So the products are on sale now,
as we were mentioning.
We ordered an iPadad and an apple tv um the ipad is not for me i am not ordering one uh i will do what you're doing
in the sense of like i'm not going to get anything and i'll wait for wwdc and then if it seems like
there is a benefit for me ordering one of these then i'll try and get my hands on one
but the it's really intriguing so like most of the ship dates for all of the products have shipped it seems like there is a benefit for me ordering one of these, then I'll try and get my hands on one.
But it's really intriguing.
So like most of the ship dates for all of the products have slipped to June and to late June,
which is not particularly outside of the realm of normality,
like after a day or two,
that you could be looking at three or four weeks
of some of the items being pushed out.
The thing that's really interesting to me,
I can't remember a time when this was the case,
when a new product come out
and the delivery date is like 21st to 28th of May.
Like that's the delivery date.
Like there's like a week window in there.
And I just found that really intriguing.
And we're going to talk about some of this stuff later,
but I guess this is Apple kind of hedging
against potential supply issues
that they might still be having for these products. apple apple we will talk about it there are definitely going to
be issues and apple has said that they aren't going to have enough to meet demand so it's
definitely going to be a challenge stephen hackett noted in the press release uh for when they put
all the information out about the pre-orders, that the green, pink,
blue, and silver will be the only iMacs available in retail stores. The rest of the colors have to
be ordered online. And those are the same colors that are in the low-end model, which is interesting.
And I'm sure the low-end model isn't the only model that'll be in Apple stores, but this is
an interesting example of them simplifying their product line in
terms of distribution.
I just talked about their retail channel, right?
Like if you pre-ordered an orange iMac, you can't hope that it will show up at your local
Apple store because they're not going to ship them there at all.
At least for now, you never know.
By the holidays, I wouldn't be surprised.
But this is a sales technique, right?
It's a.com exclusive, essentially, online exclusive.
We're not going to ship these out to the stores because that's seven different sets of everything instead of four different sets of everything.
I wonder if you need a new power adapter or you have a broken keyboard or something, if your local Apple store will have that in orange or if you'll have to also do that you have to wait um remotely yeah it is not abnormal
i mean it's actually it's the way that apple do it they only ever have certain specs in the stores
anyway so you can and it's not always just the base like i've gone to a store before and was
able to just buy in the store a higher spec model. They keep a few different specs around.
But it doesn't surprise me that they're not planning on having
all of the colors with multiple spec tiers in all the stores all the time.
It's just too much stock to hold.
It's a lot.
I think that they do...
They take their shots, right?
They have...
And this has always been the case.
They have configurations that are available.
And some of them are even sort of sold
as like a build to order,
a configure to order configuration.
But sometimes those configurations that are popular
are available in retail stores
because they do want to serve their business customers
or to upsell somebody on a high-end system, right?
They don't want to get somebody in the store saying,
I want an iMac today and saying,
well, yeah, the one that you have, you want,
which is more expensive and will make us more money
is not here.
So go on the web and leave our store
or buy a cheaper one.
Like they don't want to do that.
So they want to have a variety of configurations
available in the store for you to buy.
But there are limits to that.
I mean, there are physical limits.
These are iMacs, so they're fairly large
and you got to keep them in the back, right?
Like, there's only so many iMacs you can store back there.
AirTags.
We got them.
It's not a lot to say that you haven't already heard.
Setup is really simple.
I got some of the Apple accessories.
I think they look really nice.
I got the keyring, and I've got it on my keys.
All of those accessories are very... I've got the keyring, and I've got it on my keys uh all of those accessories are are very i've got the
key ring and i've got a couple of the different straps and they are uh the the leather stuff
unsurprisingly for apple is very well made very well made um they're they're all so expensive
i was looking at like belkin having like a 12 key key ring and all that and i thought well that's
that's more reasonable it's a little bit ridiculous that the air tag doesn't have its own little hole for putting a key ring in but at
least there are going to be some some more low quality low cost accessories like the belkin
thing because the apple stuff while very nicely made it's just like that's a lot of money for a
for an air tag they're expensive but it's but I think it's like a fashion thing.
I think they look nice.
I have one of the Belkin ones, and it's fine, but it looks...
So what I'll say about the AirTag,
the AirTag, I have it in the leather keyring in the brown.
It looks to me like a really nice keyring.
Yes.
But the Belkin one looks like i have a bluetooth tracker on my keys
and i'm not saying that that's bad but it's just not what i want yeah no i and i think that's the
rationale is that apple apple stuff's going to be expensive but it's going to be nice i think that's
their goal anyway right is that it's it's yes it's expensive and i'm glad there are other options
because some people are going to look at that and go, are you kidding me?
And other people are going to say, yeah, it's expensive, but it's nice.
And this is part of the thing that Apple does, right?
You get somebody in a store and they buy AirTag and they're like, oh, well, you know, we've got a key ring here.
And they're like, all right, let's do it.
And it costs a lot of money, but it does look good.
Because there's no doubt, like didn't i didn't pick up
the key ring and think this is ridiculous well i did i thought the price was ridiculous but i
didn't pick it up and go this is a bad value like it's like no it's it's nice it's just i don't know
if i would spend this money on something like it doesn't necessarily feel like i need that level of niceness i have a lot of crappy plastic
uh key rings and they're fine so yeah but everybody gets to make their own decisions
if you haven't bought air tags yet you're still making a decision or whatever
please do yourself a favor and get them engraved yes it's the right move it's the right move
so apple sent me for evaluation a bunch of air tags
and the sad thing about them is that all of mine are blank and it's they're not interesting like
this is boring i know i know that uh there's a lot of skepticism about uh engraving apple products
because it really is apple offers free engraving and it's nice and all but it also essentially
means that it's a lot harder for you to sell it to someone else
because it's got your name on it.
And so it suppresses your resale value
if you're somebody who resells your Apple products
and all of that.
AirTags are not like that.
AirTags need personalities.
It's a $29 tracker, like you would not resell this.
And it's not your name.
Yeah, and it's not your name.
It's a symbol.
Or you can buy it in a letter. I mean, I have one of my initials on it. One of my keys Yeah. Yeah. And it's not your name. It's a symbol. Or you can,
I mean,
I have one of my initials on it.
One of my keys is my initials on it.
And I think it looks really nice.
A-H.
M-H.
Grimace.
Ghost.
Grimace.
Yeah.
Yep.
That's what I went with.
Then I had the Grimace in one
on my backpack.
Yeah.
And then you know it
and it's like,
oh, it's like,
oh, that's my unicorn one
or whatever, right?
Like, you know what it is.
And so do that if you're going to buy your text.
But Apple need to have way more options for the engraving.
I think they probably know this now.
I mean, this is something they have been adding to it over time.
I hope that they keep adding to it.
I understand why at the same time you can't just do any emoji ever, possibly ever.
I understand why they've got to put some kind of limits on it,
but I want them to keep opening it up.
For some reason, I thought you could share AirTags with families,
but you can't do that.
It seems like all you can do if you're in a family
is turn off the privacy protection thing.
So if you had a shared key,
it's not going to say, hey, you're being stalked, basically,
to the other person in your family. And think that that's a misstep and i would like to see them add that and i've
seen some references i think steve moser was tweeting about this that there was some references
to them adding this but like for example i can in fine way see where all of adina's apple products
are because we're in a family but i can can't see where her AirTag is.
And honestly, that feels more important to me,
like to find her bag, her keys or whatever,
than her AirPods.
Yeah, she's somewhere else and she says,
oh, I left my thing at home.
Can you find it?
And I'm like, I don't know.
And you can't find it.
Just keep playing the noise, please, for an hour.
It seems like a feature that they probably omitted
while trying to get it ready to ship. Yeah, but Jasonason come on but they had two years to ship these things well
yeah they they did but who knows about the software right who knows what i know it's entirely possible
that they got the software to a point where it was shippable and they said stop working on air
tags now and that was two years ago but but yes this it is an oversight because they should absolutely have a uh at least an
option to say share this in the family yeah that that simple it is super funny that in the packaging
there are references to 2020 and in some cases 2019 2019 unbelievable like i know that this has
been the two-year rumor but like and it's really showing it I mean and this is
one of those to me where I just think
they just lost an entire
year really like 2020
was just not the right time for this product
and I think that they held it for that reason
they also had antitrust stuff that they were battling
I think they just waited it out
and that's kind of where we are with it
but I like them
yeah they're, again,
so much time spent on such a minor product,
but they're fine.
And the Find My Network is cool,
and having the ability to use it,
because it's like every iPhone.
It's incredible.
It really will make a difference.
It's pretty great.
And the U1 support is excellent uh
the way that you do the little thing and you like follow the arrow around and it starts buzzing when
you get close it's really clever which is why the u1 chip was introduced in the fall of 2019
yep but the product didn't exist until now but but it is a good thing. Yeah.
Well, I'm going to Arizona.
I'm going to take my first flight that I've taken in more than a year.
And so I'm AirTagging it.
I got AirTag key.
I got an AirTag on my bag. I'm going to try not to lose my possessions, but if I do.
Are you checking a bag?
AirTag.
Probably not.
Okay.
If you do, that would be interesting because you could watch where the AirTag was going inside of the airport or whatever.
I was actually thinking, you know, if these things really become popular, if you would have like...
You encourage your employees in the sorting area to have iPhones so that they can track
find my tags or something. Do you mount an iPhone in your sorting room so that it can
scan all of the little tags that come through and identify where they are? I don't know. It's funny.
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Out of nowhere, like a flash of lightning,
completely surprised I was, Jason Snell,
that Apple published their Q2 results
a couple of days ago.
This is something where
I remember them saying
it's coming, and it was like
a week or two before the Apple event.
Then the Apple event happened and I completely forgot that there was going to be the results.
Luckily, I don't have to do charts or listen live like you do.
I just wait for you to do the work for me.
I check their little thing and put a calendar item in my calendar that says Apple results.
And then I know that that's the day so yeah yeah
they did they're there and they were um interesting shocking i think this is the right phrase
no i seriously um and i wrote about this but i i was not using exaggeration i think this is the
first time that i've ever been covering apple's results that I literally was wondering if somebody at Apple had typed the numbers wrong.
Yeah.
From your Mac core piece, you say this is the first time I've ever looked at the numbers
and thought some sort of clerical error had been made.
I love that.
I really love that.
It's like, yeah, like a little, like one of their guys with the green eye shade,
one of their accountants is like on their little num, and they're like, and added an extra zero.
It's like, oh, no, we made a mistake.
But no, it was really like this.
It was a ridiculous quarter across the board.
Unbelievable.
It's a holiday quarter.
That was really my takeaway, is that a holiday quarter is safe.
Well, that's what it felt like.
It wasn't actually.
It's the quarter after the holiday quarter, right? Yeah, but it looks like a holiday quarter that was really my takeaway is that well that's what it felt like it wasn't actually it's the quarter after the holiday quarter right like but it looks like a holiday
quarter you know apple's business is seasonal the holiday quarters are their biggest quarters ever
this quarter was almost as big as the 2019 calendar holiday quarter and bigger than any
other previous holiday quarter to 2019 it's the third best quarter apple has had in its history. Yeah. Behind the calendar 2019 and calendar 2020 holidays.
This is number three.
Yeah.
I think Ben Thompson said in a strategery that he thinks this is, from his perspective,
Apple's best quarter ever because it's so good and unexpected.
It's so aberrant from what we expect, right?
Because it's seasonal, what you you really this is why you do
year over year in comparisons instead of sequential comparisons because uh sequential comparisons are
always going to look bad in in the second quarter except for this year because the first quarter is
the holiday quarter and it's so great and this is i know i've said this before but this is the thing
where i i always had to convince uh and explain to my bosses at IDG why Macworld's traffic was always down and disappointing. Every year they'd be like,
wow, what's going on with your traffic going down? And I would have to say, well,
January is Macworld Expo. That's where Apple makes all of its product announcements.
It's the biggest month of the year um and we chart it if you chart your
chart starting in january we always look like we're going down but we're not that's the big month
january and it's a little like that it's like don't do it that way you can't compare it when
it's seasonal you have to so this is arguably their best quarter ever when you view it as like up 54% in revenue over the year ago quarter.
Because it's, yeah, it's their third biggest ever and it's not a holiday quarter.
It's pretty well.
It actually, I think, also punctuates when we talk about how the size of Apple under Tim Cook versus the size of Apple under Steve Jobs.
Like, it's really easy to lose sight of the fact that Apple is not remotely the company it was when
Steve Jobs was the CEO. It has grown so much, especially in its revenue that it's generating
in the last decade. And this is a great example of that, where they now have a run-of-the-mill
quarter that is a $90 billion revenue quarter, which even two years ago was the holiday quarter and now it's
just a quarter that happened a three-month span after the holidays and there are reasons for it
and you know it's not necessarily repeatable but um it's shocking and and some of the details
product by product are shocking so yeah that that is the other part of the story.
So I want to give some stats to try and put some of this in perspective
because we have just some wild numbers.
So the overall revenue is $89.6 billion, which is up 54% year over year, which is bananas.
The iPhone is at $47.9 billion, which is up 66 year over year but this was expected
yeah this is uh that theory that started with the iphone 6 really that you know what really drives
iphone sales is a new design and that the s years the the interim years the gap years are not
as impressive because a lot of people wait for the new look iPhone. And here
we had a new iPhone, the iPhone 12. And I think that this shows that theory being correct, that
you create this cycle when you change the look that drives a lot of sales. Um, and they, it also
launched a little bit later, which means that not all the sales fit in the holiday quarter. So some of them pushed into the March quarter.
And that's why it was more than half of their revenue for the quarter.
So 54% of overall revenue.
And this is a stat that we've been paying attention to more recently
for a couple of reasons.
We started paying attention to it when it was going down
and because it was going down because iPhone
revenue was going down. But now that that's mostly calmed down a bit, the 54% of revenue number still
shows that like, you know, Apple is the iPhone business. But that 54% revenue number when they've
had such a good quarter for the iPhone, I think really says a lot about boosting their
other products. Right, for sure. I also want to mention a little tidbit that Tim Cook had in the
analyst call after the results came out, which was that he said the best-selling model is the
iPhone 12. He listed a bunch of markets where Apple has the two best-selling phones or the
five best-selling phones. Very five best-selling phones, very
much you make this kind of money because your product is a hit.
However, he said, also, the Pro line is selling really well.
And they talked a lot about mix, which suggests that's the mix of the product that it helped
their margins, which I read as being like, we did sell a lot of Pros, and the Pros are
more expensive.
And so we made you know we we
made more money because the mix was good the one product that he didn't talk about was the um uh
12 mini yeah uh so i think i'm gonna have to buy the mini this fall because it might be the last
one i'm a little worried about that and i love it so much the all the rumor reports the supply
chain reports suggest there'll be a mini this year and won't be one the year after
I reckon they'll keep it around on a
multi-year refresh it will replace the
SE
I hope so
or at least that they'll just every couple of
years they'll throw a mini in
but yeah I love the size
I was
moving some phones around in our house and
rolling an older phone that I wasn't using down
and all of that stuff.
And I was holding the standard sized phones
and thinking, I don't want this.
I really like the mini size.
So I guess it's me and a few of us,
but not as many as maybe Apple would like.
But this is where it gets really interesting for me.
The Mac, $9.1 billion in revenue.
That is up 70% year over year, this is where it gets really interesting for me. The Mac, $9.1 billion in revenue.
That is up 70% year over year,
making this the best Mac quarter ever.
Of all time.
And the last three quarters are the three best Mac quarters of all time.
Yeah, up 70%.
This and the iPad growth year over year
were the ones where I was like,
surely this is a mistake. Up iPad growth year over year were the ones where I was like, surely this is a mistake.
Up 70% year over year.
You know, the Mac has been doing pretty well and they've been showing some pretty good growth on the Mac business.
But 70% is not a number that has come out of that product line.
Up 70% is just not a thing that has been happening there.
That is a huge outlier.
But that's how many Macs they sold.
I assume that a lot of this is pandemic related
and that has driven sales of computers and iPads too.
But I have to think that there's also some pent up demand
for the M1 happening here.
I think it's pent up demand
and also just that they've been reviewed so universally well
that I think people may be making purchasing decisions now
that they otherwise wouldn't have made.
Just to be clear, the last three quarters,
the Mac has been up year over year in the 20s,
22%, 29%, 21%.
70%, it's a lot.
See, this is what I'm saying.
I don't think that this could this could be could just surely be just
like a pandemic related thing surely that purchasing's happened by now like by and large
like the majority of people that needed computers for the pandemic have probably made that decision
yeah before now i don't know i don't know they they talked about it on the call and i think that
they said that certainly some amount of that is probably continues to be this which is like you know it's it's not some not everybody right not everybody
buys right away and maybe it's like oh as this is worn on i'm gonna we've been using this older
pc or older mac and we're gonna update it and get a new one now and but yeah it's it's it's only part
of the story here it doesn't explain this on its own, I think.
And then the iPad, $7.8 billion, which is up 79% year over year.
Yeah, again, if you look at the year over year changes that we've been seeing in the iPad,
it's been pretty good this year, this past four quarters, but it's been like 31%, 46%, 41% year over year growth.
And the previous cycle was sort of 17%, 22%. It's been kicking around. And then you get up 79% year over year growth. And the previous cycle is sort of 17%, 22%. It's been kicking around.
And then you get up 79% year over year. It is a spectacular outlier as well.
However, we've been talking about records. We actually can't talk about iPad records because
the iPad early in the iPad era, when everybody thought, oh my God, this is going to be this
huge product for Apple. It's a whole new category. They were regularly doing, I mean, they did like 10 billion several times with the iPad.
So it's heights not seen since the early days of the iPad.
And then it went kind of like sloped down and then kind of flattened out and then it
has come back up.
But it's not quite at the sort of rolling four quarter average level of where it was
at its height, but it's actually kind of close.
So this is another kind of high,
not quite high watermark,
but I guess recent high watermark for the iPad.
I believe looking at the chart that you put in Macworld,
it is the second highest Q2.
Yeah, I mean, it is pretty remarkable.
And all of the records for the iPad are way back, right?
They're all in the old way back.
Different timeline.
Yeah, I had to do that.
On Six Colors, I just have this rolling timeline that's like four years, I think.
And so for Macworld, I did the life of the iPad timeline because that's how far you have to go back to see those big sales numbers.
to go back to see those those big sales numbers but as we mentioned uh apple very specifically warning against supply shortages for the imac and ipad and this is because of the global
semiconductor shortage people were wondering are apple going to be affected by this maybe maybe not
no it doesn't matter you can have all the money in the world you can't get around this yeah tim
cook made the point in fact that uh that this is what do you call it
legacy nodes what does that mean i don't know it's here's what it sounds like it sounds like
there are a lot of a lot of stuff that goes into a mac or an ipad and less maybe to an iphone
um and a lot of it is high-tech, cutting-edge M1
chip, stuff like that, right?
But there's some stuff that sort of
Apple buys, and
everybody else buys.
Literally everybody else in the world buys for their
products. And
those are the ones that are in short supply.
That's where Apple is bitten by
this global shortage,
is that, as what Tim Cook said was Apple knows what its demand is, but Apple despite having kind of all the money, Apple can't
buy its way out of this one that they're these components are in short supply. And I'm sure
Apple is spending what it feels like it needs to to try to get what it can from this. But there's
there's parts that they need that to build their systems that they can't get. And so their their
Mac and iPad specifically will be
supply constrained. Now, it might be that the iPhone also uses some of these things,
but that they've got enough iPhone inventory that it doesn't matter. One of the things that
an analyst asked Tim Cook is, how did you manage to ship so many of these given the shortages?
And the answer was something like, we basically blew through all of our contingency margins,
all of our buffer. We
crushed it in order to ship these. So that's great. But now they're saying essentially it's gone.
And so we're not going to be able to fulfill demand. It's also an important message for them
to send to the financial people because the whole point here is that as a public company,
they're trying to give some sort of sense of how the business is doing and where it's going. So it's important for them to say, we don't actually see demand
lagging for the Mac and the iPad so much as we can't make enough. Now, demand might not be at
the level that it was this quarter because it's a remarkably high level. But whatever the level
of demand Apple anticipates for the iMac and for the Mac and the iPad in general, it's, uh, it's,
it's not enough. They can't fulfill that demand. So it's out of balance. They can't make enough.
And so they said, our iPad and Mac sales figures will be lower next quarter just because if, if for
no other reason, it will be suppressed by the fact that we can't make enough people want to buy them and we can't make enough of them it's not a terrible problem to have no but it's not great
you really if somebody wants to give you money for a product you want to be able to give you
give them the product talking about components i'll get i'll get back around to that before i
explain margin changes so one of the things that's been made been made quite the to-do of in a lot of
business press especially is that Apple's gross margin has changed for their products
in this quarter. So Apple's gross margin has been steady at around 38% for a very, very long time.
Multiple years, multiple quarters, multiple years. It's kind of just been known.
Apple's gross margin is 38%.
That's just what it is.
However, in the last couple of quarters,
it started to creep above 40,
now hitting 42.5% this quarter,
which is a significant difference.
You know, it's been 38% for such a long time,
and now we're up to 42.5.
And this has been attributed in part to cost savings
which i think quite clearly is going from intel to the m1 right especially in the mac
yeah it's got to be at least partly yeah ascribable to the fact that they're not paying intel
i mean it's not like the m1 doesn't have costs they're like oh it's Apple's processor it's free
it's not they have to pay Taiwan Semiconductor to make it they have to amortize the cost of
their chip development although there they get to amortize their chip development over the Mac
and the right like the Mac is now part of that calculation when previously the Mac was
straight up just like Intel and and Apple's chip design team.
Like they could ascribe like the T2 or something to it, but really it was not something you could do.
So there is cost there, but what is not there is Intel and Intel's whatever price Apple is paying for all those Intel processors and Intel's markup.
Like that's gone.
all those Intel processors and Intel's markup, like that's gone. So it's presumably a lot cheaper for Apple to make its own processors than it was to buy Intel's. And that's going to roll into
margin given that they didn't really change the prices of the products. That's got to just roll
into profit margin. Services is $16.9 billion, which is up 27%.
Services is $16.9 billion, which is up 27%. Yep.
This is a more inline figure for services.
Services has been growing at 20 plus percent for a while now.
It's kind of wild, but that's just what it is.
It looks less this quarter because of these gaudy numbers put out by the Mac and the iPad.
But it's still just, you know, that services business is chugging along. It's almost 17 billion a quarter now. And as I like to remind people,
keep in mind the services business doesn't have 42% profit margin. It has in the seventies profit
margin. It's just all profit for Apple. Like it's Apple spends very little to make enormous amounts
of money on services, relatively speaking.
And that's one reason you want to grow a services business is it's vastly
more profitable.
Like every dollar you make in services,
you,
you,
you take away more profit than you do from every dollar you make selling
iPhones.
It's bottom line.
So,
um,
and then Zach is pointing out in the discord still up 27% after the,
uh,
small business developer,
small business plans come into effect.
Yeah.
Well,
remember all the,
all the reports that we had about that was really great for any developers,
but it hits a very small percentage of the overall revenue of the app store,
which is in those big companies.
But it's just,
it's just proving that point,
right?
Yeah.
Yeah.
And wearable home and accessories is $7.8 billion up 25% year over year.
Yeah. And they said a bunch of positive things about Apple watch that a lot of the people coming to Apple Watch are still new people who've never bought an Apple Watch before, that that's a large component of Apple Watch sales, and that AirPods are doing well.
And they didn't really give it a lot of color, which makes me want to peer at it a little bit and say, well, what does that mean?
But the fact is it was up 25%, and I think they had so much else going on that they really just sort of said, yeah,
it's doing great. And the other thing they said is, and AirTags are now part of this family.
I'm like, all right. Okay. Yeah, that's true. All right.
And Tim was asked a question by one of the analysts about regulatory issues being a potential risk
to Apple in the future. Tim said that like apple and their rules
and all that kind of stuff is not casting concrete and it moves with the times yep apple's just out
there moving with the times yeah they sure are they're not casting concrete at all they're
they're they're moving with the times this seemed to me like you and i have talked about the fact
that it's funny apple makes that
change with the small business program and you're like oh this is interesting and then when tim
talks to kara swisher or something he says he says oh you know that's not true about us at all
just look at what we did with the small business program and you're like yeah that's why you did it
um this is this seems very much like a message being sent by Tim Cook. Because the question here that I thought was really good was one of these analysts who, you know, they're so focused on the details of supply chain and gross margin and how many basis points and OPEX and foreign exchange and all of these things about like big business.
and sometimes you think
are they thinking larger
about regulatory environment and the fact
that Apple's business might be dramatically
changed if a court
or regulator or something forces them to change
their business model and this question
was about that it was framed as like
a big philosophical question and
got this answer out of Tim Cook which is
I think not what the question wanted but
wanted to get out of him but it was something something really interesting. And I thought it sent a
message, basically, Apple saying, look, we've already changed with that program. We're willing,
essentially, to make more concessions. When he says move with the times, I mean, what are the
times? It's not like there's just the zeitgeist it's like oh yeah in the spirit of the age now
you take less yeah larger companies will take less money from the people who are filling its
app stores no that's not it the spirit of the age is that all the politicians in all the major
economies are talking about big tech being a problem and when apple comes up it comes up in
the context of it being a gatekeeper of the app Store and demanding to take a 30% cut or a 15% cut from people and that that makes them in cases where they have an unfair advantage. And that's the spirit of the age. That's why Apple needs to move with the times is it's really him saying, we'll make changes if we have to because the walls are closing in multiple concurrent high profile legal cases
that good money bet on would suggest they're not going to win we're going to talk about one of them
in a minute but like that's the time that we're in right so like yeah it probably is going to make a
difference how much of a difference don't know depends how much of a difference is pushed on
them and that's that's what they're moving with what they're moving with is what will the courts of the world tell them they have to do and they'll
go with that yeah yeah you know we're just not casting concrete like if they force us to change
we'll change well and i actually think it's it's the truth right is is that this is what's going on
and also the truth is you never want to be, this is like when any company or
industry sees that the jig is up and like, oh, they're going to regulate us, right? Like we
spent 20 years saying, don't regulate us. This isn't an issue. And finally, and that wasn't true.
It was an issue. And finally the, the spirit of the age, the, uh, the, uh, the courts and the
politicians and all that have decided they're going to do
something about it. That's when you as a company or an industry come to the table and say,
you know, you're right. Something should be done. Here's what we propose. Because what you want to
do is control how your business changes and offer things of like, what can we do that will satisfy
you so that you will go away and not bug us and ruin our
business? What you don't want is, it's like a contract negotiation or any other legal kind of
negotiation. It's like, you want to come to an agreement because failing that, the judge is just
going to make a sentence. You want a plea bargain or something like that. This is kind of the plea
bargain, which is Apple wants to change with the times
and take itself out of the concrete
just enough to get everybody off their backs.
And just enough that when the legislatures
or the regulators look at what they're doing,
they're like, yeah, it's not so bad.
It's fine.
And it just removes enough wind from their sails
that Apple is able
to escape without being told something, uh, told to do something that they feel is more catastrophic
to their business. So that's why, you know, I immediately start to think about the Spotify
thing, which we're going to talk about in a, in a, in a little bit, a little bit more, but like,
I start to look at stuff like that and think, Apple's going to have a
response here. And it's probably going to be something like what they did with Amazon, right?
They're going to say, oh, new program. This is for music services. Music services now,
we've got a new program where they can use their own in-app purchasing. We're allowing that now,
like they did with Amazon, because you can buy movies and rent movies in the Amazon app on iOS and tvOS.
That's a break.
No, no, no.
It's a special program.
But Apple will be able to do special programs for a lot of these things that are the big pain points and get enough heat off of them.
At least that's their hope.
That they can escape without having to have bigger issues.
I do think that they've also got like,
there's,
they've got other trap doors
that they can use,
but like,
and so we should talk about this more
in the next segment,
but like,
Tim Cook's statement there,
I don't know,
it just really hit me
that like,
it's such,
without saying much,
he is laying it out there that apple will make changes
when it has to and already has started um because they know they're like they're not gonna they're
not gonna get away with it right they're not gonna get away with it they can't they spent a lot of
time saying basically like look we don't make the rules when they made the rules and make a lot of money. And now they realize that the business
as usual isn't going to work for them anymore, probably. And so they're probably going to have
to make some concessions or they're going to be forced to change. And I think the real question
is, is it too late or not? Have they pushed this too far or is there still time for them to sort of
make concessions that will get the scrutiny off of them? This episode is brought to you by FitBod.
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and RelayFM.
So I think, Jason,
it might be too late
for Apple to try and squirm out some of this stuff.
The wall's closing in.
Yeah, it might be.
It might be.
I mean, you never know.
They're a big company with lots of money.
But it does feel a little bit like they waited a little too long, though, doesn't it?
Well, I mean, the judgments have begun.
The European Commission, it has been going.
Spotify raised a case with the European Commission back in 2019.
It was their Time to Play Fair campaign that they started.
It feels like a million years ago.
But now we're actually getting the ruling of this kind of legal proceeding.
So the European Commission is issuing charges of antitrust against Apple,
in Spotify's case, for unfair practices in the streaming music business.
The European Commission says Apple has a dominant position in the streaming music business. The European Commission says
Apple has a dominant position in the market
for the distribution of music streaming apps
through its App Store,
and Apple's rules distort competition in the market
for music streaming services
by raising the costs of competing streaming app developers.
Apple have said that Spotify wants all the benefits of the App Store
but don't think they should have to pay for anything
for it
Spotify has become the largest music subscription service in the world
and we're proud of the role we played in that
that makes me so mad to read stuff like that
and Apple has argued that the revenue contributes towards the cost
of maintaining the App Store and enforcing its various content
privacy and security policies yeah apple's argument which i think is i mean there's some
truth in it but i think it's it's an incredibly self-serving argument apple's basically like
patting itself on the back saying we're responsible for spotify being successful
and you think well wait a second, what?
And Apple's response would be,
well, everybody loves their iPhone.
What if Spotify wasn't on the iPhone?
We, through our great largesse as a company,
built a software development kit and an app store
and all of these developer tools
that allowed Spotify to make an app on our wonderful phone
so that they could build their
business. And of course, missing from that is that the value accrues to the iPhone from third-party
apps and that if you couldn't use Spotify on your iPhone, it's less valuable.
Yeah. And also, without Spotify doing what it did,
Apple may have never created Apple Music in the first place.
Indeed. Indeed. So I get, again again are there truths in what apple is saying
yes apple does you could argue anyway that apple deserves some amount of compensation for supporting
third-party developers and building the app store right like but apple has also made
it mandatory and so it's not just supporting the app store it's supporting the thing that
we force you to use and like there is a lot of complexity here um and i i don't well you see
i agree with you yeah i agree with you but the point where it becomes a problem is why it's in
the european union like in the european commission it's because then
apple launched their own music streaming service which they price the same amount of spotify and
apple doesn't pay 30 to anybody else yes and this is the core issue with a lot of the stuff where
apple has built a competitor is apple has built a competitor on its platform where the rules don't
apply to it because there's no the rules don't apply to apple that it needs to share 15 or 30 percent to a third party right it's the third
party it pays itself whereas everybody else who's competing with it has to pay apple or has to
degrade its user experience and kick people out of the app and have people go somewhere else and
sign up and then log in which is they wish they could kick somebody out but they're not even allowed to do that right like they're not actually allowed to say go somewhere else and sign up and then log in, which is doable. Well, they wish they could kick somebody out, but they're not even allowed to do that, right?
Like they're not actually allowed to say go somewhere else.
Functionally, they kick you out because you can't do it there and you have to go somewhere else and you have to figure that out, right?
But that's the thing is that Apple, and this is not the first time, right?
Because the Kindle books and iBookstore are a good example of this.
Like these examples continue to exist where Apple has built a service
that competes with other services, but with one key difference that Apple doesn't have to pay
the middleman because it is the middleman. And that, that distorts as the EU said,
that distorts competition because of the, because of the app store rules or alternately the degraded user experience.
Because the App Store rules functionally bar you from using Apple's payment methods,
depending on the margins of your business. Essentially, all your profit has disappeared
into Apple's pocket. And so therefore, you degrade the user experience and you push people
away and say, you've got to go to the web in order to pay for our thing because we're not
going to charge you in-app because we would have to give 30% to Apple. So this is the preliminary
conclusion. Apple now has a 12-week period to respond to this preliminary conclusion. Before
then, a judgment will be given. the judgment is found like if the judgment
matches the preliminary conclusion apple will face a couple of things one would be a potential fine
this fine for antitrust in the european union could be for up to 10 of apple's revenue from
the previous year which could be a fine of $27 billion,
which is a lot of money.
But the bigger hit, honestly,
could be a requirement for Apple to change
the way they conduct their business
in at least the European Union.
Now, I wanted to say to you,
you were mentioning a minute ago
about you expect Apple to suggest
some change to their business like the way they did with
amazon are you expecting that they would do this within that 12 week period to get the
basically to get the conclusion to be changed is that what you're thinking i don't know about the
timing of it at all but it just it just struck me that what the european commission may want and what
spotify may want and what a lot of other parties want is apple to drop the demand that all financial
transactions for digital goods be processed through apple well i'm sure the european commission would
like the fine but that's well sure they can't if apple changes their business, that kind of isn't so much of a case anymore.
Well, $27 billion is a lot of dollars.
If it's a one-time payment, Apple can handle it, right?
The real threat to Apple is long-term change of their business model.
So changing everything is probably the easy way out
that everybody wants except Apple, right?
But it would be very interesting, I guess, if Apple were to
take a targeted approach to deal with this issue. And so my example is the Amazon, you know, the
video store program that they did, which is like, why is that only video? Why is it not Amazon's
books? Why is it not Amazon music? Why is it only video?
And I don't know. I think the answer may be because they had a partner somewhere in some
country and they wanted to make this deal, but they created a special program. And it means that
Amazon will charge your credit card to buy or rent a digital good in the app store. And that is
really weird because nobody gets to do that, but Amazon can do it with video.
Uh, really weird because nobody gets to do that, but Amazon can do it with video.
So I look at this and I think it really wouldn't be other than the principle of the thing. But if Apple's lawyers are like, this is not going our way, right?
To, it would not be inconsistent with their past behavior to say, what if we make an exception
for streaming services?
Or what if we make an exception for any service in a category
that competes with Apple's own services
that allows them to have
some different rules?
And would that resolve this?
Would that get them off their back or not?
I don't know.
But it is in the list of things
that I think in terms of Apple
moving with the times,
long hair is in the list of things that I think in terms of Apple moving with the times, um,
long hair is in disco is back,
whatever the times are.
I don't know for them to offer stuff like that.
That's not wholesale.
We give up because what does the small business program tell us?
In addition to the,
the video program with Amazon,
what does the small business program tell us?
Small business program tells us that Apple doesn't want to give it all away, but is willing to give a little part of it away in
order to keep the bigger part, to lose the battle, but win the war. And so I look at the Spotify
thing and I think, well, they could do that. That would be a way for them to get this off their back completely. And potentially, um, in, in other categories too, to just be like, yeah, yeah, yeah. If we,
if we do it, you can do it. Like if you have a fitness service, you can be in this program.
If you have a bookstore, you can be in this program. Anything that we do a service about,
all right, you can be in this program and then you don't have to pay us. Um, or you have to
offer in-app
purchase or whatever the rules are. Can we get away with something that gets... Because that's
their goal. Their goal is to get away with as little change as possible, but release all the
pressure on them. And I don't know if they can do it in time. I don't know if they're inclined to.
I don't know if it will allow them to escape. But it seems to me that there are ways for Apple to kind of like try to finesse this in order to avoid the hammer.
The hammer may hit them anyway, but I feel like there are ways that they could do it.
Now, that would be one of them would be like, oh, Spotify, Tidal, Amazon Music.
You all can now use your own thing because we have a new program.
Isn't it great?
Aren't we benevolent?
Unrelated. isn't it great aren't we benevolent unrelated during this 12 week period in which apple needs
to respond to the european commission in regards to the case of spotify they're also going to be
in court with epic that starts when this episode is released today it'd be about a three week
period of time this is a much more exciting case from the sense of everyone's involved.
The witness list is a who's who, and it's full of people.
I saw that Phil Schiller's going to be there the entire time, along with Tim Sweeney.
And then they're going to be bringing in a bunch of the most high-profile people possible.
Everyone's a witness.
This one is going to be fascinating. The amount of stuff and details we're going to find out, it's going to be so
exciting. I can't wait. Yeah, it's going to be interesting to watch. This one, again, not a
lawyer, but when I look at the details of this case, I remain skeptical. A judge can decide whatever.
I feel like Epic...
I don't know.
I'm skeptical of Epic's case here,
but Epic will make some interesting points,
and I think that even if Epic loses this case,
all the dirty laundry is going to be out there.
Or to mix metaphors,
blood will be in the water, right?
Apple is losing somehow.
Even if Apple wins the case,
it's going to be not a good thing for apple yes i agree i agree i think it's going to be tough because it's going to be more
ammunition more evidence for whatever politicians want to talk about regulating apple like and it's
funny because a lot of the conversations about big tech being too powerful are about things that really aren't about Apple at all.
But Apple has done enough to make enough people angry about these issues that Apple gets rolled in with the rest and all those other conversations.
And then they come to Tim Cook and it's like, no, we don't want to talk to you about social media.
We just want to talk to you about the App Store.
Apple's good on the things that
a lot of the other companies are bad on they're good on the social good issues right and part of
this is also just because they don't have a social network right so like if apple ran their own social
network they would probably be in some of the same problems that twitter and facebook are in around
speech and all that kind of stuff the only argument that apple gets there is that with the curation of
the app store they're accused of like kicking Parler out of the App Store and things
like that because the argument there would be their complete control of the App Store means
that if you're not in Apple's good graces, you are lost to the platform and there's nothing you
can do about that. One of my other conspiracy theories while I'm getting them out here is,
in addition to the Spotify you know, Spotify program,
essentially that allows music services to bypass Apple. And isn't that nice that Apple's doing
that? Um, I wonder if there are other, other things like that. So like Apple spent the last
few years building gatekeeper and notarization and all of these other things in the Mac App Store.
And the context has been, how do you provide App Store level kind of like control and curation
without having a, you must use the App Store approach that they have on iOS. And the way
that's always been pitched is, well, the Mac doesn't have that model. The Mac lets you download
and run anything. And so how can Apple make the
default more like the app store without it actually being everybody has to be in the app store?
And that's all true. And to Apple's credit, they have said publicly that if you want to run
software on your Mac, you can. You just sort of have to go through some hoops, but you can.
However, as a part of all this, I've started to wonder,
is that also Apple having a trap door for sideloading on iOS, right? Because if Apple
were forced to sideload on iOS, forced to allow apps that are not in the App Store to be installed
on iOS, I wonder if this would be the way that they would do it, right? That they would say,
okay, well well here's
what we're going to do is we're going to do what we do on the Mac which is an open platform and
we've got all this technology already we're going to have you got to have a membership and you have
to all that you know you have to have to notarize and then there's a setting you have to turn off
and you have to go through a warning screen and all of those things that are barriers and I'm not
sure they will get to that point
or they will even be allowed to get to that point but i start to wonder you know is that all in play
too in terms of apple kind of bargaining to try and keep as much control as it can
when the threat is that all of its control will be taken away if i was to give a fun upgrade conspiracy theory,
I would not be surprised if a couple of days before WWDC,
they announced massive changes to the app store.
Yeah.
Yeah.
Which is,
you know,
what they've done before when they,
when they did the subscription change over and all that,
they did it a couple of days before,
which was really smart.
Cause it didn't make the whole presentation about that one thing.
You kind of get it out there. It's around the time people are thinking about it i just think
that the wagons are circling the the bloods in the water the sharks are coming in like whatever
metaphor you want to use i just don't think if they make it out of these two cases somewhat intact
i i just think that you cannot be as smart as those people are in that
building and not realize that you just don't have a lot of legs to stand on anymore even if you think
you're right it's very clear now that there is a lot of money in trying to prove you wrong
well and apple's apple's take on this was always if it ain't broke don't fix it it's also why they
didn't address some really obvious problems with the App Store, including the fact that it's built on iTunes and it's a hit single model. And so, like, you can't sell upgrades. You still can't sell upgrades. And they've got this subscription model that they're doing now. And apps are adopting that, not necessarily because they want to, but because that's how they have to do it, because that's what Apple has decreed, right? Like, Apple has, for a long time, I would actually argue until Phil Schiller kind of took over the App Store, there was a period there where Apple, like, literally had no introspection of the App Store. Like, they never thought about what could be better. Because, like, why? Winning is, as the saying goes, a great deodorant. They were making so much money that it didn't matter.
And that arrogance has continued, right?
Like they're so successful.
They make so much money.
We just talked about it.
That like, who's going to stop us is really the attitude.
It's like, we have this great platform.
People love it.
The users love it.
The users love the apps.
The developers will go along and do what we say.
Who's going to stop us?
And I imagine there
was a little voice inside Apple, somebody saying, oh, the courts will stop you. The EU is going to
stop you. The politicians are going to stop you. Somebody is going to stop you. And it probably
took too long for that voice to be heard enough for them to realize it. But when Tim Cook says,
we're going to move with the times, I feel like that voice has been heard now, right? But as we said, is it too late? But yeah, yeah, they've gotten to
the point now where they realize who's going to stop us is the courts and the law and the
governments are going to stop us. And we are going to need, like I said, to scramble to try to make
it look like we're responding to criticism in a benevolent way. We've listened to your questions about this. And so we've got an
exciting new program that allows more freedom. Isn't it great? And you know, gritted teeth,
they don't want to do it. But I do think we've reached the point where Apple's going to start
rolling a bunch of things out that they hate, but they know that they have to do it because
the alternative is worse, right? The alternative is you can't run an app store anymore, or you
can't write apps for your own platform anymore, or something that's really bad, like really,
really, really bad to their future as a company. And so they will make concessions. And yeah,
I wouldn't be surprised if it happens soon, given what's going on here. But yeah, we'll see. And I want to be clear, although I appreciate Apple talking about the importance of iOS and the App Store and curation and security and all those things.
There's a lot of garbage and scams and stuff in there.
So they don't really have as strong an argument as they would have if they had to get back to the, it doesn't matter if we're making so much money argument, that they could have made a better argument if they had policed the App Store better, but they didn't.
And two, I appreciate abuse on the mac now
that's how malware spreads on the mac as they tell you how to turn off all the security while you're
installing the app like i get it it's not a great situation in terms of that at
the same time do i think that ipad and an iphone might be you know better if you had you know the
ability to install third-party apps on it that didn't go through apple yeah yeah it would be
more dangerous yes yeah it would also be better.
And Apple would have to compete.
That's the other thing.
Apple would have to compete on user experience and say, well, you know, it's better to do it our way
because it's easier and faster.
It's like, yeah, okay.
But you have to compete now.
Talking about subscriptions and revenue splits
and all that kind of stuff uh let's check back in
with apple podcast subscriptions yeah this is something we spoke about a couple of weeks ago
and you know the dust has kind of settled on this uh i think that by this point we both kind of feel
pretty similarly like this is a somewhat decent in some instances pretty good arrangement for certain types of podcasters
yeah i wrote a piece about it on six colors um i think it's a 1.0 product essentially there's a lot
of good stuff in there anybody who's been through what we've been through in launching subscription
services you know for for podcast support uh it's hard and there are a lot of people out there who
are podcasters who are not going to do the technical work it's just too much who can do this program and allow their listeners who are hope you
know presumably a lot of them on apple podcasts in order to get money from them in an easy way
um there's stuff that it should do that it doesn't currently do um that we covered but you know i
don't want to make the mistake of saying sort of
like, well, it's not for me and therefore it's irrelevant because that's not right. Like it has
some interesting aspects, although I think it could be better. What struck me though, when I
was writing that piece and the piece is very much like, here's what's good about it. Here's what
needs to change. And then the last section is, but here's why it really actually kind of makes me angry, is all the
other things we just talked about, which is App Store rules mean that nobody can ever
compete with this product on iOS.
Because no podcast app can put a feature.
First off, there's some technical issues regarding in-app purchases and how those are
handled that are very complicated and would be very hard to overcome. But assuming you could
overcome them, if you're Overcast or Castro or Pocket Cast or anybody else, to make it as easy
as an in-app purchase, you have to hand all the money to Apple. And at that point, one of two
things happens. Either you've put a lot of money into a subscription product that you can make no
money from because you're competing with Apple, who's paying itself.
Or you have to change the pricing. And that means you are more expensive than Apple.
And that's not great. Or you take your cut out of what you give to the podcaster. And now the
podcaster is joining your program, but making less money if they're in your podcast app. And it just fundamentally, the App Store rules lead to a situation where Apple is able to launch features and services on iOS that cannot be competed with directly because of the App Store rules.
app store rules and that this is the same argument right it's the same argument which is apple has created a method where they take a percentage anybody else who could implement it would have
to pay apple the same percentage as if apple's work on that was the same as apple's work on
their own product and as a result apple has built a barrier there where basically only Apple can do it in a way that makes any sense.
The way we make it work is like an interesting gray area where we put a link in our show notes that go in every single podcast client, which you can click and it could take you to a checkout
page and you sign up and then you get given an RSS feed and you go back to your app and put it in.
Now, Apple's not taking any of that because
it's not going through the App Store. It's nothing to do with the application. It is an outside
transaction, right? So like if you're listening in Pocket Cast right now and you click the link,
Pocket Cast is not involved in this transaction at all. So no money's owed to Apple, right?
Now, this is like an interesting kind of gray area,
but like pocket cars can't do it themselves, right?
They can't say, hey, we're going to handle
these subscriptions for you now,
because if they did that,
they wouldn't make any money out of it
because they'd have to pay Apple 30%
and then they'd have to give us the rest,
basically, to remain competitive.
And, you know, some apps, including Overcast, used to have a little
button that you could tap
and it would sense for
a tag that was attached to
any kind of subscription field,
which we used to do.
But that's since gone away
because it just wasn't used. It wasn't standardized,
so we never mentioned it. Nobody ever mentioned it.
It was just a thing that was there.
And the truth is, also also when Marco put that in
he knew that if Apple called him on it he'd have to remove it because technically
even though it's not his money, like it's one of those
things where fear of app review
leads to, and this is, I put it on the list, fear of app review
rejecting your app and destroying your business leads to, and this is a, put it on the list, fear of app review, rejecting your app and destroying
your business leads to a level of timidity in development because everybody's afraid that
Apple's going to kill their product if they try to do something. Even if the rules, even if you
went through the process and, and Apple was like, oh no, this is great. Who's going to put in all
that work and then roll the dice and, and see if and see if Apple will be convinced that it's a good idea?
So this was always a case where it felt like it was on the edge of what the App Store rules even would allow.
And yeah, it's so quiet and nobody noticed it.
And it just wasn't a thing.
It's the story of the App Store, right?
Which is there's a way to pay, but you have to do it in a web browser.
You can't do it in an app, except for Apple apple you can do it in an app for apple but nobody else
can do that so this is also interesting when looking at spotify so spotify just announced
their plans for podcast subscriptions as well and it's all being run through anchor if you want to
go with them which is their the tool that they're using for this.
I believe that it's also working through a kind of a different tool as well. But for most podcasters, they'll use Anchor. Spotify are taking no cut at all until 2023, where the cut will be
5%. But you do have to arrange your own Stripe account. So you're going to be paying the card
processing fees. So actually once spotify's
cut comes in the difference in money between them and apple is actually not that much
but the good thing about spotify system is it's the content that you go through with them it's
not locked to spotify because it's going through anchor they give you an r like if you subscribe
you get an rss feed as well so it will show up in spotify once you're subscribed because it's going through Anchor, they give you an RSS feed. If you subscribe, you get an RSS feed as well.
So it will show up in Spotify once you're subscribed
because it's all tied together.
But you can take the RSS feed with that exclusive content
that somebody's using through Spotify's platform,
and you can use that to subscribe in any application that you want.
Now, Spotify are doing the thing.
They can't tell you.
It's that frustrating thing again, right?
So you see that there's exclusive content, they kind of say like this is subscriber only content
but they don't tell you how to get it spotify is telling podcasters you have to put the links in
the notes yourself so people can go out and get it but i'm assuming on the back end once you've
paid it then just shows up in your spotify account Yeah. The magic here of what they're going to do with Anchor is that, first off, unlike Apple
Podcasts, which will only work in the Apple Podcasts app on Apple's platforms, unlike
Apple Podcasts, Spotify using Anchor, you can create this subscription feed.
And how is that different from what we do?
The answer is because it's Anchor, Spotify is tied into Anchor.
And Spotify, when you subscribe to one of those podcasts that's on Anchor, it will just appear, like you said, in your Spotify app because it has connected you to that, right?
It knows that it's you.
You're authorized with Spotify.
You've linked your account.
And keep in mind, you can't add an external URL podcast in the Spotify app right now.
That's not a thing you can do.
So this is a way that it'll still be listenable inside of Spotify, where our per-user member
feed URL thing doesn't work in Spotify right now.
Not right now.
But Spotify, I think surprising everybody, have said that they want to also allow for companies like ours,
companies like Jason's who have their own memberships
that are serviced through another platform or through a platform of their own.
They want to try and get this content into Spotify.
They don't want to do the arbitrary RSS adding thing because it doesn't work with the
way that Spotify's kind of infrastructure works. The ins and outs of that, not necessarily important
to get into right now. So they are creating a OAuth based system. So an existing platform
would create a hook that you can then basically use your login information in the Spotify app,
and then you can get the content straight into Spotify.
I think this is fantastic.
And Spotify take nothing, and they're not asking for anything.
They just want the content.
Because Spotify, their business now is,
they want to be where you listen to all of your podcasts.
So if that includes these, they want to have them as well.
And this is a case where this is something
that you know apple's not interested in doing something like this but this is uh yeah i'm
really interested in this but apple still allow the arbitrary rss feed thing right right that's
true whereas spotify had built a complete wall and then this is a way to get in where you use oauth
so so assuming that memberful which is our provider of membership uh services
supported the oauth system that spotify is using to verify somebody is a subscriber
at that point we would be able to offer membership podcast content inside of spotify
which i'm very excited about i want to take a quick side note here now
and just say that
I don't think Spotify, I think it's pretty clear
actually, are not going to be as bad for the
podcast industry as everybody had originally feared.
It does seem a little less absolutist than
we were led to believe early on.
So they're embracing openness.
I love that that's on both
sides because membership content
can be listened to anywhere, right?
That's more open than Apple podcast subscriptions are.
I feel like that this OAuth system is very creative first in saying like, hey, we don't necessarily want your money, right?
Like we don't want all your money.
Like if you want to do your own thing, fine, and you can still get to your listeners.
You just have to do this little bit of extra work. It's like, okay, fine.
And their other thing is, and everyone says, oh, they're just getting ready to do ads,
and they're going to make their own ad platform, and it's going to kill the industry.
I don't think this is true at all in the sense of killing the industry. Spotify are very clearly building a large user base so
they can create their own ads to be inserted into podcasts. And it will probably be a thing that you
will say, hey, I want to be a part of this program. I want Spotify's ads. So I will now use either
Anchor or Megaphone, which is the two hosting platforms that they use. And then I can get
Spotify's ads put in.
But the thing that I just want to mention for this, I think a lot of people forget, is YouTube.
YouTube's ads are not the only ads on YouTube videos.
And YouTube's ads creators make less money because they're not as well made. Like most of the high paying, effective ads on YouTube are the ones that are inside the videos.
Like our ads are inside of our podcasts.
And then they are more targeted.
They are read by the hosts, which are better.
And it requires that if any good host
will have done their due diligence
and make sure that they're happy with the sponsor or whatever.
So I think that those two things can continue to exist on Spotify it's the same way that they do
on YouTube that Spotify can have their ads but creators can have their ads as well and whichever
wins wins right so I just think that the cards that Spotify are playing now they're kind of like
putting it all on the table and I really just don't think it's as bad as I'd originally feared
and honestly they're making decisions I wish Apple would make.
Yeah, other than the fact that Spotify, I mean, I think the problem was this idea that
Spotify structured their podcast stuff so that you had to submit to them, but also that
you couldn't do a custom RSS feed, which was the only way that we had to do members-only
content, right?
That wall that has turned out to be a little more porous than we maybe thought and that uh that helps right because that spotify
isn't open quite but it's like spotify once it seems now wants to be part of a larger podcast
ecosystem instead of it's like i don't know this is a bad metaphor but like if i talk about that
wall like they open the they open a window or they open the door like it's still its own thing but there are pathways in and
out and there's circulation that's allowed to happen whereas it seemed when they first did
this that they're like we don't get it we're just going to build podcast stuff into spotify
where you submit your podcast and they appear in here and like we're our own thing and we're
going to take podcasting and we're going to go home. And with their purchases and some of their announcements that they made, I don't know whether this was their original approach that was very much like the world happens inside the Spotify app and nowhere else.
I mean, just for me personally, as a listener, I don't want my music and podcast inside of the same app.
And also the Spotify podcast listening experience, I think, is inferior.
But some people do.
Some people do. And that's and that's fine.
area but some people do some people do and that's and that's fine right that in the end this is the biggest problem with apple's podcast thing honestly is that only works in apple's app
and like that's fine lots of people use apple's app but if you're a podcaster and you want to
make money by having people support you being in having a program that only works in one place is not as good as having a program that works in
all places, right? Like that is a problem. And so being on the other side of it and being like,
yeah, we're just part of the whole, and you can listen in Spotify too. I want to be there.
There are probably people who listen to our members only podcasts, who mostly listen to
podcasts in Spotify, but have to not for us.
Right.
Probably not that many.
The other thing is that,
that we have listeners in Spotify that don't become members because they
can't get the content.
Right.
Same,
same point.
Yeah,
exactly.
So sure.
I would love for,
for our stuff to come to where they listen.
Right.
That in the end,
that's the goal of somebody who's making content in a medium or in something like podcasting, right?
The goal is I want anybody to be able to hear it wherever they want to hear it.
I don't get a bonus for the number of people who listen in Overcast or listen in Apple Podcasts, right?
It's like I don't have a horse in this race. I don't. I want to be everywhere. I want everybody to have an opportunity
to listen wherever they feel comfortable because I just want the most people to be able to listen.
And then fundamentally, yes, I want the most people to be able to become a member and support
the show. And so it sounds like Spotify's approach is going to allow us to do that.
And that's great because Apple already lets you do that
with their approach.
Apple's subscription thing is a new thing
but you can already listen
to our members podcasts in there.
Spotify is the one where you can't
and so I'm encouraged by that.
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Let's do some hashtag
ask upgrade questions.
Dan asks,
if you only had $1,600
to spend on new hardware
and had to pick one,
would you go with the 24-inch iMac
or the 12.9-inch iPad Pro
for Magic Keyboard?
So I like this
because it's sort of like
a shopping spree.
Yeah.
Right?
You have to buy one
um so what would you buy and you can't buy anything else um i'd get the ipad pro because
i want a new ipad pro because i love the 12.9 inch ipad pro and i've got a macbook air and my
ipad my imac pro would not i don't the-inch iMac isn't the right replacement for it.
It wouldn't actually be faster in a lot of ways than my iMac Pro.
So this one's actually pretty easy for me.
It would be the iPad Pro.
As of today, right now, I would get the iMac
because one, I want it the most
because it's beautiful and I like to look at it. For my kind of work
setups right now, the iMac would actually be of the most benefit
to me. I don't feel the requirement to change out my iPad right now
but the Mac Mini that I'm recording on
and editing on at the studio right now feels so much slower
than my M1 MacBookbook pro so i have
an intel mac mini and when i'm editing in logic this thing it's like just chugging it's not
enjoying it and things are moving slowly and it's it's it's a bit of a mess considering as well like
and it's it's it's upsetting really because this is a six-core Intel i7 with 32 gigabytes of RAM,
and my M1 MacBook Pro with 16 gigabytes of RAM just runs circles around this Mac Mini.
So for me right now, I would go with that.
That's just for my own work preferences right now.
I can see for a lot of people that the iPad would be the right thing to go for.
I think it really depends what you do.
I think for most people with that budget,
the iPad Pro with Magic Keyboard would be the better option.
But it kind of depends.
Are there specific Mac apps you need to get your work done?
If there are, well, that's your answer.
But if you're just doing typical regular kinds of work or home-based computing, the iPad Pro is probably the most fun.
Eric asked, should Apple add more software power to the iPad Pros and still keep iPadOS the same
across the iPad line, or should they break it up? I think one iPad OS makes sense, but remember, Apple often will roll out features that have
hardware requirements, right? So it wouldn't surprise me at all if Apple
at the developer conference said, here's a new feature, but this requires the M1.
This requires, you know, whatever it is, this much much ram now that they're listing ram they could do
all the ipads can do this but you can do more of this on this ipad it's like with some of the
multitasking stuff it was like you know you could have two apps side by side but you can't do slide
over or whatever with some of the older ipads when they first introduced that or it was some
some like uh element of that.
I don't think it would be
unreasonable at all. Let's say
that the thing Federico keeps talking about,
hypervisor framework,
the ability to run a Linux
VM
in
an iPad.
Right?
I could see Apple just saying
M1 only.
Right now that's iPad Pro 2021 only, right? But here's the thing. Eventually, the iPad Air will have an M1 in it, right? In two years.
And then eventually after that, maybe the iPad has an M1 in it and the iPad mini has an M1 in it.
Maybe the iPad has an M1 in it and the iPad mini has an M1.
Maybe eventually.
Eventually, yeah.
That's what I think that they can do.
I don't think they're going to break it apart and say, well, now there's iPad Pro OS and all that. But I think that they will feel free to release features as they have on the Mac that require specific hardware.
And below that point, you just don't get it.
And that's okay.
specific hardware and you know below that point you just don't get it and that's okay and that that that did happen with multitasking where originally only like the ipad air 2 or something
had the ability to do multitasking when the beta came out because it was the only one capable
enough with processor and and ram to do it and then by the time the fall rolled around
they i think then had some new ipads that that better supported it like I think that was when
the iPad Pro came out so so yeah that's that's my answer Eric is that I think Apple will feel free
to introduce some features that are for example M1 only and over time more devices will support
the M1 and therefore get those features but, it might just be limited to, for example, today's iPad Pros.
Matthew, who was the originator, suggestion,
suggestioner, that's a terrible word I just made up,
of Snell Talk asks,
do you think Apple's new podcast description model
will encourage them to improve or develop
their software offering for recording,
editing, and publishing podcasts?
No.
I don't think so either.
I like the idea of this question.
It's like, yeah, well, they now offer more tools.
So they have offered more tools for publishing, right?
So Apple Podcasts Connect,
which is a thing that has existed before,
now has additional features that it needs to have
for subscriptions to work.
But then because of that,
there are some additional things that people can do,
whether you like that or not or whatever.
There are now new tools.
I don't think that this will push them to do more things,
which, I mean, and the main thing would be to really improve iPadOS.
I mean, if you've listened to the show for more than a couple of years,
you would have to talk about this.
Well, they could put podcast-friendly in logic for example they could do that
or garage band which they did at one point and then they took them sort of took them back out
i could see a scenario where they would you know say oh well we're adding some features to logic
or garage band that will automatically upload your podcast to the back end of of podcast connect or
whatever yeah i mean i don't think it needs
i'm not thinking that this would the features would be tied to subscriptions just the idea of
like apple now kind of taking a bigger hand in podcasting again would that maybe set have them
say like hey we now have these new features for podcasters in our software tools it's not
impossible that what has what will happen or has
happened is somebody... I've been beating on the drum of Logic and GarageBand being better for
podcasters forever, right? And maybe there's a meeting where they're like, no, no, no, we're a
music tool. No, no, no, we're a music tool. And then this podcast initiative happens, then somebody's
like, but what about podcasts? And a manager's like, yeah right okay right so it's possible but i wouldn't count on it i feel like apple's sort of like
decided like their tools aren't required for any of this stuff it's just podcasts
and it's been so long that they have not been participants in this actively
so i don't know what they would do there are a handful of things that I wish they'd add to GarageBand that would make it much more suitable
for editing podcasts than it is. And I'd love to see their stuff as we've talked about on iOS,
like the pro stuff, because GarageBand on iOS is not suitable for podcast editing.
But there are other tools too. So I don't know. I don't expect it. It's possible. It's always
possible. But I think it's unlikely that this initiative
is suddenly going to transform their software strategy
regarding audio software.
I don't think that's going to happen.
And Ben asks,
did tvOS 14.5 fix Mike's Apple TV and HomePod issues?
I had four days of being able to use my HomePod pair
with my Apple TV again until this morning
when the failures began again.
Oh boy. So I was like, I updated and I was like,
alright, I'm going to try this out, right?
I'm going to give it a go.
So I've been cut for the last
best part of this week. I've been using it.
It's been great. Love it. And then we were watching
Netflix today. All of this
with Netflix was perfectly fine.
And today, every five minutes, it was pausing.
And I have to play again.
And every five minutes, pause again.
I have yet to do the full factory restore of my Apple TV
that I said I was going to do.
I haven't done it yet.
I'm going to give it a little bit longer with tvOS 14.5.
And then I'm going to do that too. It's just one of those things where I know it's going to give it a little bit longer with tvOS 14.5, and then I'm going to do that too.
It's just one of those things where I know it's going to be a pain
and it's going to be a bunch of time and I don't want to do it, right?
But I will eventually do it.
One thing I don't know,
how does tvOS back up?
Does it?
Like, if I do a restore, will everything come back i'll do i think so because i know you
can do the home screen sharing i mean does it will it does it also work with restoring an apple tv
so i i don't know i'll find out like i think oh everyone in the discourse now telling me it
syncs now that i know that i will just do this at some point in the not too distant future just to see if it improves
my experience. Just because I've had
a couple of people who wrote in that were having
the same problem with me, and they did do this
and it fixed it. Now, I've also heard
from other people who fixed it in other different ways
and that didn't work for me, but
maybe this one will. I don't know.
I think that's it for today's episode, Jason Snow.
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If you've been thinking, hey, all these cool kids
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And go check it out.
If you want to find Jason online, you go to sixcolors.com
and he is at jsnell on Twitter,
J-S-N-E-L-L.
And I am at iMike,
I-M-Y-K-E.
Thanks so much for listening
to this week's episode of Upgrade.
We'll be back next time.
Until then,
say goodbye, Jason Snell.
Goodbye, Mike Riddley.