(Preview) New iPhones and an Absence of Awe, How Oracle Wins in the AI Era, Questions on MidJourney, Meta, and Armageddon

Thoughts on Apple's new generation of iPhones—which are genuinely exciting—and why the underwhelmed reaction from fans and analysts reflects choices that Apple made a long time ago and a new direction that lowers the ceiling on any release. From there: Mail on Apple's messaging and the competition in China, Oracle's strategy in the AI era, Midjourney and Meta, the strategic logic (or not) of Reality Labs investments, whether and how Netflix could attempt a Disney-ification (at the Sphere? via acquisition?), and a message to the Armageddon heretics.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Andrew Sharp?

  Hello and welcome to a free preview of Sharp Tech.

• 0:08Andrew Sharp?

  Hello and welcome back to another episode of Sharp Tech. I'm Andrew Sharp and on the other line, Ben Thompson. Ben, how you doing?

• 0:19Ben Thompson?

  Disappointed, Andrew. Disappointed.

• 0:21Andrew Sharp?

  Disappointed in what?

• 0:22Ben Thompson?

  I, in honor of my Green Bay Packers playing your Washington Commanders, and wearing a green shirt. Uh, you are wearing a blue shirt. Where is the maroon and gold?

• 0:34Andrew Sharp?

  Oh, boy. Well, I thought we solved this problem a year ago. I'm wearing Cowboys blue here on the podcast. It's really terrible.

• 0:42Ben Thompson?

  No, renounce your past. You were just being a punk kid wanting to rebel against your dad. Dad was right, uh, and you should be wearing maroon and gold.

• 0:53Andrew Sharp?

  Oh, yes. Uh, we're recording mere hours before Commanders Packers Thursday night. By the time people listen to this, um, the Packers will probably kick the Commander's ass. Are you a Packers shareholder by any chance? Am I talking to an NFL owner here?

• 1:08Ben Thompson?

  Of course I am. What a silly question.

• 1:10Andrew Sharp?

  All right, good. That's good to hear, you know? And the Packers was great.

• 1:14Ben Thompson?

  Actually, you know, I understand it's not on my disclosure, uh, my ethical disclosure on stratechery. So maybe I should, actually, I should add on there. That would be hilarious. I do own, I do explicitly own stock in the Green Bay Packers. Just a heads up.

• 1:27Andrew Sharp?

  Well, honestly, God, that's why I was curious. Cause you famously only invest in index funds out of journalistic integrity, but I'm glad to know that I'm talking to an NFL owner.

• 1:37Ben Thompson?

  Terrible for the bottom line, but what are you gonna do? Yeah, um, made the editorial decision. You know what? I read about the big tech companies. I can't cover everything. Should have done that with my portfolio a long time ago, but what are you gonna do?

• 1:47Andrew Sharp?

  Yes. Well, uh, we'll see if we can make it through this podcast with the clash coming Thursday night. Uh, but I'm very excited. I'm back into football and it goes back to some-

• 1:59Ben Thompson?

  It's great. I love this for you.

• 2:00Andrew Sharp?

  Well, yeah, I'm like, I've always been in college football, watching every Saturday, but I'm now back on the NFL bandwagon and it goes back to what we were saying last week, where oftentimes the things that become cultural touchstones are massively popular because they're good. And I was reminded of that over and over again, as I was watching a fantastic opening weekend in the NFL.

• 2:22Ben Thompson?

  They're good, and also it's fun to be in touch with cultural touchstones.

• 2:27Andrew Sharp?

  Like, yeah.

• 2:27Ben Thompson?

  Even if you don't like the NFL that much, everyone likes it. So it's fun to talk about. Like, there's just value in, like, the social currency. It like, you know, it's just yet another way that our alleged cool people have failed us with their policies, which is pretending like if something's popular, it must be bad and you should reject it. Actually, you know what? If something's popular, that makes it more fun, not less.

• 2:50Andrew Sharp?

  Exactly. I had a lot of fun all last weekend, and I've been counting the days until Commanders-Packers Thursday night to start it all over again. Unfortunately, I am not wearing my enthusiasm, literally, like Ben is on the other line. No maroon for me.

• 3:07Ben Thompson?

  It was actually total coincidence, I had a green shirt on, but it worked out well for this opening.

• 3:12Andrew Sharp?

  Indeed. Well, and it's sort of a puke green. It's not a forest green.

• 3:16Ben Thompson?

  I was thinking, maybe do I run up and grab a Packers jersey? That would have made it even better, but what are you gonna do?

• 3:22Andrew Sharp?

  Maybe next week. They're gonna be one of the best teams in the league, so we're gonna have plenty of opportunities. As for the show today, it's time to close out Apple Week, Ben. We're gonna talk about the iPhone event, and we're gonna start with an email from Carthick, who writes, "Guys, I just want to take a victory lap for calling out relatively early on the Sharp Tech timeline that Apple is no longer a company interested in making bicycles for the mine. I'd come to think of Apple more as a fashion outfit, but I think Ben's CPG angle is better. The sugar water analogy is especially rough, and I see why Ben picked that one. Given Apple's history, I'd settle in between and say that Apple is to technology

• 4:05Andrew Sharp?

  what consumer packaged goods companies are to chemicals. They use technology..." And or chemicals for sure, but that isn't what they're really about anymore. Is Apple still a technology company at its core? The question that looms over anything, over everything.

• 4:24Ben Thompson?

  No, no, no, no, I disagree. I'm sorry, Carthick. I'm glad you patted yourself on the back because I am not going to join in. Uh, Apple is a technology company. They're just focused on technologies that most people don't really care that much about anymore. Uh, and so I mean, like they, they, they, they're still the best mobile chip maker in the world. The phones, I think, were very impressive this year. Uh, the, you know, the AirPods, I was just recorded dithering. That would be, be posted tomorrow. John was raving about them, just unbelievable sort of.

• 4:57Andrew Sharp?

  These are the AirPods three?

• 4:59Ben Thompson?

  Yeah, sorry. This, so this is a product you're not familiar with, but it's basically like the AirPods that you have on right now. But without the wire, it's amazing. Um, so, uh, so, no, I didn't say they were not a technology company. I don't think that they're not a technology company. The technology they're focused on is one that a lot of people don't care much about. That's a, I, I think an important distinction. And we can get to the sugar water point maybe in a bit. But what I was trying to capture with that is the frustration and sense with Apple. That

• 5:40Ben Thompson?

  do we want to sit here like seals and clap a company for having fiscal discipline? Like what we want and what we love is a company going for it and just doing things and trying to change the world. That's the part that's gone. The, the vision, like Apple's just not existent in the most interesting technology space. Like, that's just sort of a fact of the matter. And that is kind of a bummer. And as a business analyst, I will.

• 6:08Ben Thompson?

  I guess reluctantly admire their sort of cash flow statement and their low cap X relative to their peers and all those sorts of things. Doesn't get me very excited. I'll tell you that much.

• 6:17Andrew Sharp?

  Well, and that's the thing is in the past 10 years ago, these iPhone events did capture people's imagination and Apple was pushing forward and innovating in all sorts of mind blowing ways. But let's work backward as we have an Apple State of the Union conversation here. For anybody who missed it on Tuesday, there was an Apple event. It was billed as an awe dropping event from Apple in the weeks leading up to it. And I hated that copy. Made me audibly groan when I saw it a couple of weeks ago.

• 6:49Ben Thompson?

  Did it make you audibly groan?

• 6:51Andrew Sharp?

  Oh God, that's gonna make me groan right here on the podcast. Um, Apple at this event announced updates to the base iPhone and the iPhone Pro. They also announced a new iPhone Air that will be thinner than any iPhone that's ever been made. The Pros are made of aluminum now as opposed to the titanium era of the last two generations. They will have 12 gigabytes as a 12 gigabytes of RAM as opposed to eight gigabytes of RAM along with a bigger battery and a better camera. So Ben, am I missing any crucial nerdy details about what was announced? And what did you think of these updates to the iPhone, the most successful product of

• 7:36Andrew Sharp?

  the last 25 years?

• 7:38Ben Thompson?

  Well, I think the the air was the most interesting, but for a non-obvious reason. My prediction is they actually don't sell very many airs. Like, like the, if you care about the camera, and by the way, I don't know why we need a camera bump on the air, because if you care about the camera, you're going to get

• 7:59Andrew Sharp?

  You're gonna get a Pro. Yeah.

• 8:00Ben Thompson?

  Right.

• 8:00Andrew Sharp?

  Exactly.

• 8:01Ben Thompson?

  If you care about battery life, you're going to get the Pro, obviously. The, the air does have the high-end processor, which I think is great. Makes it much more attractive than sort of the old regular iPhone Maximus or whatever it was called. I can never keep the name straight. It wasn't a Max. What was it? What was it? Whatever. There was the, not the mini, they had the larger plus. It was the plus.

• 8:21Andrew Sharp?

  Oh, yeah.

• 8:22Ben Thompson?

  So.

• 8:23Andrew Sharp?

  It did start to get pretty confusing there between

• 8:25Ben Thompson?

  I find it compelling for For two reasons. Number one, it's cool. And there's a bit where John Syracuse used to have an old thing about why do they make the iMac thin? It's a computer on your desk.

• 8:38Andrew Sharp?

  Yeah.

• 8:39Ben Thompson?

  Like, who cares how thick it is? And it's an admirable bit. You make it thin because you can.

• 8:46Andrew Sharp?

  Right.

• 8:46Ben Thompson?

  And like, you can, like, and you just learn stuff and you miniaturize stuff and you figure out how to do things in the future. And it will pay off in the long run in ways that will be unclear until you get there.

• 8:58Andrew Sharp?

  Right. You can anticipate it. By the way, that is the era of Apple that was capturing people's imaginations.

• 9:05Ben Thompson?

  That's right.

• 9:05Andrew Sharp?

  And taking their breath away. And so in that respect, yeah, the air, what they're doing is putting all of the compute in the little nodule that also holds.

• 9:14Ben Thompson?

  Which I love.

• 9:15Andrew Sharp?

  Yeah.

• 9:15Ben Thompson?

  There's this idea, it reminds me of, of the digital island, which is, okay, Apple has Face ID and they have the front-facing camera, of course. And the question, like, they don't have the technology yet to, like, put that inside the screen so they don't even know it and it's shooting through, whatever it might be. I'm sure they would prefer to do that.

• 9:33Andrew Sharp?

  Mm-hmm.

• 9:34Ben Thompson?

  So you have a sort of lemon and it's a brilliant example of making lemonade. Where actually, let's use it, not just have this black thing in the middle of your screen, let's create an entire user interface around it that is actually genuinely useful. I think the digital island, like, when you're going on a trip and has your flight information on there, whatever it might be.

• 9:56Andrew Sharp?

  Yep.

• 9:56Ben Thompson?

  Or you could easily access the podcast that you're playing. Like, it's a great example of, okay, there's this thing that the easy solution is to just, let's, as you see on Android, let's make the black part as small as possible and then just sort of ignore it and pretend it's not there. Instead, they took it and made it into something that's cool.

• 10:15Andrew Sharp?

  Yeah.

• 10:15Ben Thompson?

  And, you know, it all.

• 10:17Andrew Sharp?

  Cool and useful.

• 10:17Ben Thompson?

  It's, and all the software around it, the way the bubbles sort of expand and compress and it could be two things at once. I love it. It's a great thing. I see a similar thing here. The camera bump is really annoying. It gets in the way and it was just sort of growing and growing, like this big wart on the corner of your phone. And it's like, okay, if we're going to bump out the phone, have this thing there. What if we actually leverage that? And this idea, we can put all the compute up there. Cause one of the challenges with thinness, and we'll get to this with the Pro, is heat dissipation. Like they have the high-end chip, but their chips run hot. You have to dissipate the heat. You can't have it squeezed in the phone with the battery around it. All that sort of, all those sort of challenges.

• 11:02Ben Thompson?

  You have to run the electronics to it. All these things that are just, you'll ever open up an iPhone. It's incredible the way like all stuff is all packed in there. So if we're going to have an extrusion, let's make the extrusion bigger, actually. Shove everything up there and then we have the battery. And you had lots of people picturing the module being like, oh, could this, could this lead to like the future glasses? Yes, right? Like you get the practice of making electronics really small and confined in small places. That will pay off in the long run. And sorry, Karthik, that is technological work that Apple is better at than, than, than almost anyone. So that's super cool. Again, I think they screwed up with the camera. If you care about the camera, you're going to get a Pro.

• 11:43Ben Thompson?

  They should have made the plateau flat and make it a little thinner, not have the extra camera bump. So I think that was a mistake. Maybe they'll fix it, fix it on the next one. Like you're selling thinness. You're fighting physics at some point. If you want to sell thinness, degrade the camera so it fits in the phone. Like that would be sort of my one critique. And also I'm not going to buy it. And I am also going to reference the air all the time. Because you have people, oh, the Pro so big, the Pro so heavy.

• 12:12Andrew Sharp?

  Get an air.

• 12:13Ben Thompson?

  Go get an air. Give me my big, chunky, thick, actually runs all day, has 47 gazillion cameras, all of which are now like super high resolution. Perfect. That's the, and it feels like Apple, like it was good for Apple to like have the air. So they can actually make the Pro Pro. It's like, this is, it's like when the MacBooks, the, the, they actually fixed the MacBook Pros. They actually made them thicker. They added ports. They like, they, they made them into tools. I see my devices as tools. That helped me get stuff done and the Pro is more to like and I people work at play

• 12:56Ben Thompson?

  about the font this big thick chunky font like that font is in contrast to the air's delicate super thin font it's like you know if you want like like I feel like you could put a poster of the iPhone Pro next to a poster of like Milwaukee Tools or something like that it's like you're getting the same sort of sense and that's great I love it.

• 13:18Andrew Sharp?

  I completely agree and I found myself wondering as they were rolling through the iPhone Air announcement like who exactly this product is for like what person cares about a camera?

• 13:31Ben Thompson?

  Yeah, I feel like you get to innovate you get to shut up all the whiners.

• 13:34Andrew Sharp?

  Well, but also it's like, like, I mean, battery life is more important to me than just about any vector the iPhone has.

• 13:44Ben Thompson?

  And by the way, the iPhone Pro benefits from what they did for the air because it also has all the electronics up in that massively larger plateau up there, which is great. Give me more battery life. It's fantastic.

• 13:56Andrew Sharp?

  Well, it speaks to the primacy of the iPhone generally and how important it is in basically every iPhone customer's life that the thought of sacrificing battery to have a thinner phone is at least unfathomable to me, but maybe there will be a bigger market than I imagined for the iPhone Air. But the Pro, I came away from the announcements about the upgrades to the Pro, planning to buy a new iPhone and going.

• 14:23Ben Thompson?

  I was actually kind of disappointed. I'm like, I'm gonna actually do Android for real this year. Like I use AI like AI so much. I'm really excited to explore and I want this phone actually in a major way and it's not just because it's orange, although that is definitely a benefit.

• 14:36Andrew Sharp?

  Well, look, it's also partly because the iPhone that I have, it's made of titanium. It gets really hot every day. The battery life sucks. I'm just not happy with the product. That's one of the reasons that I've been flirting with the idea of getting an Android or Pixel or whatever it may be.

• 14:52Ben Thompson?

  Um, yeah, no, I think Jonathan was John was on this a while ago, like the opposite of Carthick. Carthick is like pat me on the back. Jonathan is like.

• 15:02Ben Thompson?

  I deserved a pat on the back, but I wasn't bad enough to get it.

• 15:04Andrew Sharp?

  I'll read Jonathan here. He says, "Goats, I mentally wrote an email to you a year ago and I never sent it. I'm kicking myself now." The thesis of the email-

• 15:13Ben Thompson?

  Yeah, I'm ready to kick you too, Jonathan. Should've sent this email.

• 15:15Andrew Sharp?

  The thesis of the email was that the iPhone 16 Pro was deeply disappointing for three reasons. One, titanium is unattractive and doesn't hold color well. The color options all suck. Two, the phone was way too heavy. Three, titanium does not disperse heat well and the phone gets way too warm. I felt very strongly about all three points, but I was afraid to say it with my chest. Well, fast forward a year later and it seems Apple agrees because they have finally reverted back to aluminum for the Pro phones. Aluminum allows for much better colors, it's lighter, and disperses heat better. It remains the ideal material for high-end phones. Thank goodness our national nightmare is over.

• 16:01Ben Thompson?

  No, I agree with all points except for one.

• 16:03Andrew Sharp?

  Okay.

• 16:03Ben Thompson?

  But the Pro is not yet perfect for me.

• 16:07Andrew Sharp?

  Why not?

• 16:07Ben Thompson?

  Because what I want is a plastic phone. Uh, like, the, like, no, I'm actually dead serious. I, like, I view this, I, it's not a fashion accessory, it is a tool. Plastic does not attenuate radio signals, so you could actually, like, have better antennas. You, like, one thing I like about this is, is the glass bit on the, on the back is smaller, but yet they need it in part for, for signal reasons. The, like, just in, but aluminum is a gazillion times better. I think I was happy about titanium because at least it wasn't steel, which they were doing for a while. I don't know what they were doing. Like, like, yeah, what, it was, it was, it really was, felt like, and it was so, you know, I mean, Apple, I'll join

• 16:48Ben Thompson?

  Carthage, and Apple dropping a Steve Jobs design is how it works. Uh, just, sometimes feels a little bit rich. You need to be more in our good graces when you're doing that, Apple, uh, to invoke the Steve Jobs quote. If you do that, I'm gonna invoke a Steve Jobs quote in response. Uh, but the, uh, uh, steel? Really? At least titanium was somewhat lighter. And in this case, this phone is actually heavier than the previous one with titanium, even though aluminum is lighter. That's because it has more battery. Like, like, battery is the heavy part there and I'll, I will make that trade. And again, if you want a iPhone, get the air. Like the, so yeah, the, the Jonathan is totally right. Jonathan's big mistake here is not sending the email.

• 17:29Ben Thompson?

  But yes, and the heat dispersion is a big deal. Like, the last two phones have been crazy hot. And I don't like

• 17:34Andrew Sharp?

  I mean, honestly, I find myself wondering, like, am I using this wrong? Is it breaking? Like, do I need to get a new phone tomorrow because something's wrong with my phone? And so if I can sidestep that process with an aluminum 17 Pro, I'm gonna do it. I'll be buying a phone on Friday.

• 17:52Ben Thompson?

  Yep. No, for sure. Um, so yeah, no, I, I, I love the phones. I think they're great.

• 17:56Andrew Sharp?

  You seem to be in the minority with that reaction to the event. I mean, I, look, my reaction to the event, the presentation of these keynotes is so stilted and antiseptic that I find myself rolling my eyes throughout most of it and it's hard for me even

• 18:11Ben Thompson?

  It's almost hard to pay attention.

• 18:12Andrew Sharp?

  That's how I feel. I don't really retain information about what's being presented because it's so boring and monotone.

• 18:19Ben Thompson?

  At least they went to a real city this time. It was great to see some Midwest representation. Chicago, beautiful. That is a gorgeous Apple store, uh, right, right on, right on the river there. But yeah, the, I, it's just, I mean, it's funny. People were, were ripping on the Google presentation with Jimmy Fallon hosting and all this sort of, you know, bunch of stars. Yannis was, was in there. I paid attention to that presentation. Like, the, there's an aspect of being live that is meaningful. You might screw up. Like, you see, like, just sort of delivery is interesting to observe. And I would rather have had the Google presentation than watching Apple executives for the 47th time, standing in an Apple store, talking about these products. It's

• 19:02Andrew Sharp?

  Recording a 70-minute commercial. I mean, it's a tough ask.

• 19:05Ben Thompson?

  It was only 70 minutes. At least it was only 70 minutes. Like, but that's a problem where it was actually quite short and it still felt long. Not ideal.

• 19:13Andrew Sharp?

  Yes. Uh, it was a bit of a grind, but then I read about the updates afterwards and I was like, man, I actually need to go get an iPhone 17 Pro. But the wider reaction to these updates, it seemed like it was more angsty. So what did you think of the general public? And particularly the Apple fanboys and the way they processed the iPhone event this week?

• 19:35Ben Thompson?

  Well, this one I thought was so interesting because like, like, Number one, you mentioned, and maybe this is because the titanium just really wasn't good. They've been on a three-year cycle for phones, but this was a two-year update. Like, they came out with the new version only two years ago, and they've already updated again. Which, again, that might be, like, that might be just an issue if they realized they screwed up, and so they needed to fix it sooner. Yeah. But it's the interval phones, like last year's phone, or the S additions, those are the ones that are boring. Like, yes, they do updates and new cameras and new chip, blah, blah, blah, but it's still the same phone and all the, like, they, it's a totally new phone. They introduced a completely new form factor in addition to the new chip, which, by the

• 20:17Ben Thompson?

  way, the chip, it has a new GPU with units or aspects of the GPU that's designed for LOMs. Okay. One thing that, I think I've mentioned this before, but Apple's, like, neural processing unit, that wasn't useful for LOMs. That's meant for, like, some basic machine learning algorithms that have, like, photo identification and things along those lines. And this is sort of like a low-key sort of admission that, um, okay, now we're actually designing this, but hey, it's, you know, it's 2025, not that long after this whole movement comes along, and I think that's a good timeline to be introducing a meaningful AI upgrade in terms of their hardware and their chip.

• 20:56Ben Thompson?

  So you get a new chip, new form factor, the cameras, like, three full-resolution cameras is great. I think the selfie camera, the square sort of idea, so it doesn't matter, you have to hold your phone however you want, you're getting the same quality no matter what. Yeah. Super obvious, but also, like, a great addition, like, makes sense. And yet, everyone immediately fell back to the, oh, so boring, guess I'll wait till next year. Waste of time, yeah. Next year's gonna be more boring, just, I don't think they're gonna update the industrial design again next year, and...

• 21:29Ben Thompson?

  I could have ended there, right? Like, no, you guys are wrong. But it's like, what I think was happening is people were reaching for something to describe how they felt. And I think they reached for the wrong thing. I don't think what was happening here was that Apple had a boring update. I think it was a very interesting update. What they're reaching for is the building, ongoing sense of disillusionment that Apple is just not really important or involved in the future.

• 22:02Andrew Sharp?

  The most important technology that we'll see in the next 20 years here.

• 22:07Ben Thompson?

  That's right. They mentioned Apple Intelligence as this. They had the live translation thing, et cetera, et cetera. But hanging over all this, there was no update on the timeline for the new Siri, by the way. Hanging over this is just sort of this general sense that

• 22:22Ben Thompson?

  Apple is still stuck in 2015, right? Like, and, and I wrote after W W C. The article I wrote then was called Apple Retreats. And I'm like, unlike last year where they promised the moon and totally failed to deliver. This year they're like, oh, let's do what we're good at. Here's a new user interface, which, uh, by the way, I thought looked terrible. In all the screenshots of the image, I'm not, I'm not looking forward to that.

• 22:45Andrew Sharp?

  That's the only reason I'm reluctant to get the 17 Pro is I don't know if I want to dive in headfirst into whatever they're pushing on people, but such is life.

• 22:54Ben Thompson?

  The, the, but, but there was an aspect of what the company needed to reset. They got over their skis. They promised stuff they couldn't deliver. It was super embarrassing. John Gruber wrote, something's brought in the state of Cupertino and I think he was right. Yeah. And so it was healthy, I think, to reset. But I think the angst and disappointment and flatness of the response.

• 23:20Ben Thompson?

  That's sort of the, the price of resetting. That's the price of retreating is people are excited if you announce new stuff. And if you realize healthily, I think that we're not in the state or we don't have the capability to deliver stuff and we need to make sure we can under promise and over deliver. The implication of that is you're not going to get the hype and people aren't going to be excited. And that's what I think people were feeling and they were articulating it as, oh, there's nothing here. There was a lot here. It just wasn't what people wanted it to be.

• 23:54Andrew Sharp?

  Interesting, yes. And wasn't what these events used to be like to experience as a tech community. Um, they open-

• 24:02Ben Thompson?

  Right, and just, and I think just the broader sort of context here is I think it was timely that we had the, the remedies decision last week. And we mocked it last week, this idea that Apple's not going to have money. You know, look, the Google deals conservatively $20 million a year. Probably more like 25 or 26 at this point because it's tied to the volume of searches, which sort of do keep going up. I mean, some sort of decline in the last 12 months supposedly, but still that, that number's from like 2020 or 2021 or something like that. And they made a hundred million dollars of profit last year. So 20 to 25%, you cut that out and that is going to hurt. On an objective level, they still would have $75 million in profit.

• 24:43Ben Thompson?

  Okay, uh, they would have money to spend on innovation and it's absurd that this was a reason for the judge to not impose what seemed like a pretty straightforward remedy to undo the harm because of that. But what's funny is the judge is like, Apple might innovate less. And I'm like, that's what happened. The entire anti-competitive problem with Google paying off Apple was not DuckDuckGo or Bing or Yahoo or whatever that hack alternatives to Google there might've been. The only entity that could conceivably fight with Google at Google's level is Apple. And, and they cut, they bought them off.

• 25:25Ben Thompson?

  They bought them off and Apple, and this is where I was getting at with the sugar water thing. Apple-

• 25:32Ben Thompson?

  A long time ago chose profits in exchange for basically not competing in an entire space. And that space just happened to be the best way in, the lead in to AI. Like, there is a clear link between what it takes to build a compelling search engine, what it takes to build AI. You have to get a lot of data. You have to catalog it. You have to sort it. You, you have to like, be able to manage, reason over, deal with large data sets. Apple basically opted out of that entire game in exchange for a check. And now today, when people are angsty and Apple can't deliver on AI, it's like, well,

• 26:12Andrew Sharp?

  They don't have the muscle groups anymore.

• 26:13Ben Thompson?

  You're trying to go into the gym and bench press a large amount of weight and you haven't worked out in 10 years. Like,

• 26:21Andrew Sharp?

  Yeah.

• 26:23Ben Thompson?

  At best, you're gonna fail. At worst, you're going to hurt yourself.

• 26:27Andrew Sharp?

  Yeah.

• 26:28Ben Thompson?

  Which they did last year. They hurt themselves badly by promising stuff they couldn't deliver, which was basically analogous to someone going in a gym after 10 years, trying to do something that they used to be able to do and couldn't anymore. And then they screwed up their back. Apple screwed up their back. They are, I, I mean, there's a theme here. I've written, "Apple's middle age." I wrote "Boomer Apple" a while ago. Like, they're, it's what it is.

• 26:53Andrew Sharp?

  So now are they just embracing being in their mid 40s and accepting reality and adjusting accordingly? Because they opened with the Steve Jobs quote, "The design is not just what it looks like and feels like. The design is how it works." And as you mentioned earlier, we've mentioned the sugar water quote a couple of times. Steve Jobs asked John Sculley famously in the early 80s, uh, he was at that point the CEO of Pepsi, "Do you want to sell sugar water for the rest of your life or come with me and change the world?" So is Apple accepting that they're in the selling sugar water era of their company's life cycle?

• 27:33Ben Thompson?

  I don't love the sugar water analogy. I just went there because of the, the famousness of the quote. Again, and because, By using sugar water, I opened myself up to Carthick's unfair attacks. So I guess I have to blame myself for that.

• 27:47Andrew Sharp?

  And look, I don't know how the soda business works, but Pepsi has basically been the same product for about 75 years. Coca-Cola, same deal. Apple is making incremental improvements year over year.

• 27:59Ben Thompson?

  Right. And so it's not sugar water per se. The more interesting part is the change the world part. Does anyone feel like Apple is changing the world?

• 28:08Andrew Sharp?

  Yeah, it's a fair question.

• 28:09Ben Thompson?

  And I think the fact that clearly the answer is no. That is what I think drives just overall disillusionment and disappointment, or worse, complete disinterest.

• 28:19Andrew Sharp?

  Yeah, well, and I like this quote from Jobs that you also featured in your article. He said, "My passion has been to build an enduring company where people were motivated to make great products. Everything else was secondary. Sure, it was great to make a profit because that was what allowed you to make great products, but the products, not the profits, were the motivation. Scully flipped these priorities to where the goal was to make money. It's a subtle difference, but it ends up meaning everything. The people you hire, who gets promoted, what you discuss in meetings." And I thought that resonated in part because it seems to be, at least from the outside, that there has been a shift in terms of who gets promoted, what's discussed in meetings.

• 29:02Ben Thompson?

  Just look at the Google deal. The Google deal, it is literally choosing money over competing and innovating. Like, there's just no other way to frame it. They decided to get paid off and basically closed up, didn't even bother competing, innovating, growing. There was no, let's make the iMac thinner because we can, when it came to search or information or anything along those lines.

• 29:27Andrew Sharp?

  Yeah.

• 29:28Ben Thompson?

  And that's why, that is why this quote pairs with the other one. Is Apple a company today that is eager to find new products to change the world? Or are they eager to make money? And it feels like the money comes first and then it defines their space. It defines their competitive place. Within that, I do think they're still making good products. Like, again, and so it's not like a doomed cause per se. And again, I do think they're still a technology company, but they're not all of technology. They're not taking this hundred million dollars in profits or a hundred billion. I had to say million earlier, I meant billions. I think I have to go back and edit that.

• 30:12Ben Thompson?

  I think we'll do what I was talking about.

• 30:16Ben Thompson?

  They're just, they're, they're not going for it. And I think that's a bummer, but it is what it is.

• 30:23Andrew Sharp?

  Well, is the apparent malaise just part of the natural life cycle of companies though? Because like there's a constant.

• 30:31Ben Thompson?

  Right, but Apple was supposed to be different. Like, and I think that that's what disappoints people is Apple was supposed to be different. And it felt like they were different for a long time. And I think maybe some of that attribution was maybe a little favorable to Apple. Like the example I always point to is people like, look at how Apple disrupted themselves with the iPod. They replaced it with the iPhone. And I'm like, yeah, they replaced it with a more expensive product with, with better margins. Like they, they was like.

• 31:00Andrew Sharp?

  And not altogether a different product. Like if you look at what has made Apple, one of the most successful companies in the history of the world. Like they did cool ambitious things in the eighties and then the iMac was cool and ambitious. But like, it's really all been about the iPhone at the end of the day for them. And so I just, it's hard to have a paradigm shifting innovation in one era. And then continue to shift the paradigms in the era after that. Like I read your thoughts on Apple and I found myself thinking back to some of the conversations we had about Google. Um, remember when they acquired Wiz, I think in the spring? And there were, there were people reacting to that acquisition. It was the biggest acquisition in Google history.

• 31:45Andrew Sharp?

  And people were wondering, why doesn't Google just spend half that money and build those capabilities internally?

• 31:52Andrew Sharp?

  And the reality is they're just not very good at that thing anymore. And it's actually better for them as a company to recognize that blind spot and act accordingly. I don't know that Apple has that same self-awareness because obviously, Apple did try to build Apple Intelligence internally and push it to the world, and it was a spectacular disaster. But at the end of the day, I think they're suffering from some of the same sclerosis that Google has, which isn't really surprising because most big companies get fat and lazy after enjoying a monopoly. Like, there's been no competition for Apple for 15 years.

• 32:29Ben Thompson?

  Yeah, no, you're probably right. Like, just like, nature's undefeated. And that, you know, it's a bummer. It's like, people wanted to think Apple is different because if Apple is different, that there's hope that this isn't sort of inevitable. But maybe you're right.

• 32:45Andrew Sharp?

  Well, and I mean, like, Google did build a search engine, and Google isn't necessarily going to win the next era and have the paradigm-shifting innovations that push everything forward. They're less hopeless than Apple.

• 32:59Ben Thompson?

  They seem to be doing better than Apple, yeah.

• 33:01Andrew Sharp?

  So, we'll see. A couple more Apple questions before we move forward here.

• 33:08Andrew Sharp?

  All right, and that is the end of the free preview. If you'd like to hear more from Ben and I, there are links to subscribe in the show notes, or you can also go to sharptech.fm. Either option will get you access to a personalized feed that has all the shows we do every week, plus lots more great content from Strategery and the Strategery Plus bundle. Check it out, and if you've got feedback, please email us at [email protected].