Apple History and Apple Psychology, How Apple Should Capitalize On Its AI Potential, Why It Probably Won't

Revisiting Apple's nadir in the 1990s, along with internal friction that boiled over after Steve Jobs' passing, and explaining why Apple execs should—but probably won't—respond to the Apple Intelligence embarrassment by empowering third-party developers to build great AI products that run locally on the iPhone.

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

• 0:04Andrew 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?

• 0:15Ben Thompson?

  I'm doing well, Andrew, getting girded up for some combination of history lesson and psychoanalysis, but not of you, so you can rest safely.

• 0:26Andrew Sharp?

  Thank you so much. I'm glad I'm not going to be in the therapy chair here tonight. I am also doing pretty well. I gotta tell you, I have never taken a position on this issue, but I think I'm becoming a pro daylight savings guy as I get older here.

• 0:41Ben Thompson?

  It's really interesting because I have always been a, well, number one, I'm pro the system as it is. Actually, my main objection was the whole moving it to be earlier and later in the year. I think that what you want in the summer is you want summer nights, right? Like it's the best. It's the best. It is. It is the best. And so, yes, the twice a year changing everything is a pain. It's become less of a pain as everything becomes digital. Like we used to have to go walk around the house and change, you know, the microwave would never be updated. And so it just, you want, you want more, more light at night. And meanwhile, having grown up in the north, not having light in the morning is a real problem. Yeah, it sucks. It gets dark at night. Guess what?

• 1:26Ben Thompson?

  Everything about winter sucks and not having light until like 10 a.m. is way worse. So I've always been pro the system as it is. And actually, I believe in the U.S. they changed it in like the seventies. Yeah, because this isn't the first time people have complained about this. And they actually changed it back within a year because people realized, actually, this really sucks.

• 1:48Andrew Sharp?

  I never knew that. Wow, okay.

• 1:51Ben Thompson?

  But I did see a pretty compelling, as I've gotten older and more aware of like health issues and more attuned to sleep.

• 2:01Andrew Sharp?

  Cicadian rhythms, yeah.

• 2:03Ben Thompson?

  Yeah, I actually kind of buy the, it's bad because you don't, you need light in the morning most of all. And, and so the, again, I think the big problem is changing it to March when it used to be in April, then it's not as big of an issue. Dark mornings remain a bigger problem than dark nights. So I am, I am.

• 2:25Andrew Sharp?

  That's your take.

• 2:26Ben Thompson?

  My take is I am pro the old daylight savings time. And then if we have to do just one and not changes, I am pro standard, not daylight. And that is a change for me as I've gotten older.

• 2:40Andrew Sharp?

  Yeah, I mean, it's been a source of heated debate. Nate Silver had a take, Sagar and Jetty had a take.

• 2:47Ben Thompson?

  Yeah, I think Sagar's take helped convince me on the, the morning bit.

• 2:50Andrew Sharp?

  Yeah, I respect both those guys. I actually haven't really read much on either side of the argument. All I know is that for the last several days, it's been awesome to work until 5:30 or 6:00 and then have an hour of daylight to take my son to the playground as a palate cleanser. So I'm all in on the pro daylight savings side.

• 3:10Ben Thompson?

  You didn't know what you're getting into. I have more takes. The other take that's interesting. So I'm in Taiwan, which does not have any time changes. And I always dislike that because it gets dark pretty early here, even in, even in the summer. And I'm like, man, you know, the being light longer is better. And then I remembered it is so freaking hot that it actually is only tolerable at night. Right. And so it's actually a good thing that it gets, that it gets darker sooner because that means it cools down. So that, my entire take psychology might be screwed up in that regard. So Wisconsin's experience of sunlight and Taiwan's experience of sunlight is very, very different.

• 3:51Andrew Sharp?

  Well, I imagine we'll get some emails about this. Maybe we could keep the conversation going.

• 3:57Ben Thompson?

  We're gonna get more emails about this than anything else.

• 3:58Andrew Sharp?

  All I ask is that I don't get a wall of like 3,000 words from people arguing one side or the other. Keep the takes concise.

• 4:07Ben Thompson?

  It has to be. What do you say 150 words?

• 4:10Andrew Sharp?

  Yeah, yeah, yeah, let's keep it to 150 words and we'll roll from there. But as for this show, as promised on Monday, we are going to revisit Apple now that you have written your article. And before we dive into it, I just want to offer two notes at the top. Is that cool? A little preamble?

• 4:31Ben Thompson?

  You're the host. It is Sharp Tech, not Thompson Tech.

• 4:33Andrew Sharp?

  There you go. It's Sharp Tech. So first of all, it occurred to me earlier in the week, every now and then we talk about missing the forest from the trees with respect to general AI progress and how incredible this moment in technology actually is. And I also think it's been easy to miss the forest from the trees on Apple and its AI efforts where what's happening here is pretty amazing. We have the most valuable company in the entire world, the most successful company in the history of technology, and they are just completely lost as they try to incorporate AI software into their business. And it's just a remarkable twist as we head into the new era here.

• 5:16Andrew Sharp?

  I mean, Apple's flagship AI product was essentially vaporware. And for the past year, they've had a worldwide marketing campaign, advertising features that straight up don't exist. Like, I don't know how we got here, but I just wanted to state the obvious on that front because we've, we're in the weeds making jokes here and there. But stepping back, the broad strokes of what's happening are pretty remarkable. I mean, like, Apple suddenly looks like Microsoft.

• 5:44Ben Thompson?

  And I think it's probably, and correct me if I'm wrong, particularly interesting for you because you have no recollection or remembrance of Apple's dark days. And you've only, you've only known Apple as this sort of behemoth astride the world. Behemoth?

• 6:01Andrew Sharp?

  Behemoth, yep.

• 6:03Ben Thompson?

  Thank you. And, and yeah, this is something different. I do want to recommend, it just dropped before, like, literally like an hour ago. So, so I don't think you've read it yet. John Gruber wrote a piece today, something is rotten in the state of Cupertino that is a tour de force. I think it is the definitive, definitive article on this whole episode. And one of the most brilliant points he makes in this article is

• 6:29Ben Thompson?

  One of the reasons we failed in our analysis and the reason why John is beating himself up for the first half of this article for failing this analysis, and we talked a little bit about dithering earlier in the week, is because Apple had built a tremendous well of credibility as to we're going to ship what we say we're going to ship. And as he notes, Apple in the 1990s was the opposite. They were the kings of vaporware. I think we called back last episode to Microsoft in the 2000s being the kings of vaporware. That was, Apple did it first. I mean, there's lots of things Apple did first and Microsoft copied.

• 7:09Ben Thompson?

  Selling things that didn't exist, software visions in keynotes that were never actually even possible, that is something Apple did. That was one of the first things Steve Jobs had to fix when he came back. And what makes this distressing, and John really puts his finger on it and rightly draws it all the way up the chain to Tim Cook, is this is a really fundamental failure in that regard. It's not just that they couldn't ship this, it's that how did it even make it into a keynote suggesting that they could when they couldn't even do a demo of it? And fast forward, how do you make a commercial about that?

• 7:53Andrew Sharp?

  The fact that it was in the demo, that's why so many people suspended disbelief in terms of what Apple was capable of.

• 8:00Ben Thompson?

  It's because Apple had credibility. Like if Microsoft put that in, I think there's still enough overhang of the 2000 era Microsoft, where people like John and I would say, okay, let's see a demo. Even just Alexa, we were on it on this last week saying, I don't buy this. I need to see this, I need to see a demo of this. And I'm default skeptical that everything they showed in the Alexa Plus keynote would work. And guess, and we did not extend that skepticism to Apple because Apple has shipped what they promised, sometimes with delays. And the one exception is that charging mat. But, you know. Okay, you're allowed a mulligan, right?

• 8:44Ben Thompson?

  In a span of 20 years. This goes far beyond that. And as John noted, there is no reason, and you would be a fool, to ever take seriously any Apple promise like this ever again, until it's in people's hands.

• 9:01Andrew Sharp?

  Yeah, yeah, exactly. And I mean, the reason I invoked Microsoft earlier is because Microsoft has released a couple of different products over the years that have instantly been punchlines, whether it's the Zune, or the Surface, or whatnot. And Apple Intelligence is a punchline for eternity after the last nine months here. And the only other introductory note I had was that I finally tried Apple's Image Playground. Man, oh, man, that was an impressively useless app. You mentioned it on Dithering with Gruber.

• 9:33Ben Thompson?

  It's so bad.

• 9:35Andrew Sharp?

  I realized when you mentioned it, I had never actually opened it, so I gave it a whirl.

• 9:40Ben Thompson?

  And then you search for it, you search for Image Playground, and you see the icon, and you're like, this can't be real.

• 9:46Andrew Sharp?

  Oh, my God. That's the one thing they did ship, and I spent a good three minutes after using it trying to think of any scenario in which I would open it again, and I came up empty. So, not great. But in terms of how we got here, you mentioned to me offline that Apple psychology was something that you used to write about often, but haven't discussed as much recently. I went back and reread a 2013 post you wrote on Apple and the App Store. So, as you noted at the top, I am going to put you in teacher mode for the first segment here, and we'll start with a specific question that stems from your piece in 2013. Who was Scott Forstall?

• 10:31Andrew Sharp?

  Why is he no longer at Apple? And how is that story relevant to Apple's evolution as a company over the last 10 years?

• 10:40Ben Thompson?

  Well, Scott Forstall is a mythic creature because he left Apple a long time ago, 2012, 2013, somewhere around then. And so because he's been gone for so long, he gets to wear all the sort of angst and wishes of people that are critical of everything Apple has done since then and could say, oh, if only Scott Forstall was there.

• 11:05Andrew Sharp?

  He never made a mistake. This is what people do with Grantland, for the record. They talk about Grantland like it was the greatest website in the history of the world. And the further we get, the more perfect Grantland becomes. So-

• 11:18Ben Thompson?

  Grantland was the most perfect history, was the best website in the history of the world. For the record, I-

• 11:22Andrew Sharp?

  It was a great website.

• 11:22Ben Thompson?

  I said that, I said, two points. Number one, I said that when it existed, so this isn't a looking backwards thing. And number two, it employed Andrew Sharp. How could it not have been one of the greatest websites of all time?

• 11:35Andrew Sharp?

  I enjoyed my time there.

• 11:36Ben Thompson?

  Hey, Grantland, people don't realize, Grantland, the sort of Bill Simmons project that started at ESPN, it was amazing. Like, Grantland was one of the last content-focused destination sites, where every single day, I had Grantland saved on my iPhone screen. I would go there and I would read what was on there, even if it was about a subject that I didn't think I cared about, because I had such a high confidence that it would be a great article that I'd be happy to have read. And that's an amazing, that's an amazing place to be. And ESPN killed it in budget cuts and fights with Bill Simmons. And maybe it would have never existed going forward, but it was, it's truly one of the greatest websites of all time.

• 12:20Ben Thompson?

  And, but I would like to think that we are, in some small senses, sort of, the progeny of Grantland. Because where, where did you learn to podcast, Andrew?

• 12:31Andrew Sharp?

  Out there in LA, my first podcast with Juliet Litman and Chris Ryan. And then I got a note from Bill saying, you're pretty good at podcasting. So here we are.

• 12:42Ben Thompson?

  A classic example. You're like, podcasting is stupid. I can't believe I'm doing this.

• 12:47Andrew Sharp?

  So, all right, so Grantland was great and deserves the reputation. Tell me about Scott Forstall.

• 12:53Ben Thompson?

  Scott Forstall, the Grantland of tech executives. I like it. It's even better than Unicorn. Unicorn has other meanings, so yes, we'll stick with that one. We're at, I'm adding this to the sharp tech nomenclature going forward.

• 13:05Andrew Sharp?

  Perfect.

• 13:06Ben Thompson?

  A mythical creature. So my personal experience with Scott Forstall, which I think helps color some of this, was one of the greatest things about being an intern at Apple, which I was in 2010 with the Apple University team, when that team was just getting spun up. Today, it's kind of more like a glorified HR organization. Back then, it was like the original vision, which is we're, you know, we're gonna help Apple's top 200, which is like this, again, this sort of mythical group of people that get to go to the big retreat every year where they make all their plans for the future. Help them understand what makes Apple, Apple. There's a bit where I think that entire concept is doomed. When you start codifying things, you start to ossify them. But that's a completely separate discussion that we could have another time.

• 13:49Ben Thompson?

  But, um, but I was, but yeah, I was there and this was all interns in the company. Every week, there was a lunch where a different Apple executive would come in and they would, some of them would present, some of them would just take Q and A. So we got to talk, we got Steve Jobs, we got Johnny Ive, we got Tim Cook, we got Scott Forstall, we got a whole bunch of other executives.

• 14:11Andrew Sharp?

  Pretty unbelievable opportunity, yeah.

• 14:13Ben Thompson?

  Yeah, no, it was awesome. So, uh, Scott Forstall, I can't remember now exactly what Forstall said in that presentation, other than the fact, the tangible sense you got coming out of that presentation is this is the most arrogant son of a bitch I've ever encountered in my life. Just, I can't even remember the detail. It's one of those things where memories are like...

• 14:42Ben Thompson?

  Tinted by emotion, right? This is the problem with like, you're in law school, right? You know, the problem of like eyewitnesses in like crimes. It's like, what actually happened versus where that person feel as it was happening? That colors their recollection. And what I remember from that presentation is like the palpable tangible sense of arrogance that emanated off of this guy. So when you fast forward a few years and he basically gets unceremoniously dumped from Apple and you know, for allegedly because of the Apple Maps failure. But really what you heard is just everyone in the executive team just hated this guy. You're like, yep, that makes sense. I can get it.

• 15:26Andrew Sharp?

  So what were his responsibilities? Like, why would he be conceivably the fall guy for Apple Maps 15 years ago?

• 15:34Ben Thompson?

  Well, this gets, this, this gets to the other perspective that you would get from him if you talk to people from Apple at the time. I, I don't know if I've ever talked to employees more loyal to their boss than anyone who worked for Scott Forstall. And so who was Scott Forstall? He was like an, so the, okay, we're going deep back into history. And all this is, we said at the top, psychology of Apple. This might all be BS. Take the, this is like the Apple vaporware of podcasts. Take it with a grain of salt. This is my takes on it. As someone who worked at Apple for three months, I think that perspective was actually, I was in a very unique place to get some really interesting insights. I talked to a lot of senior executives, people very senior who were at Apple for a long time.

• 16:19Ben Thompson?

  And so I think I have some interesting insights. Obviously I've followed the company for years, but this is one person's perspective. So take it with a grain of salt and, and so with that caveat up front.

• 16:28Andrew Sharp?

  Okay.

• 16:29Ben Thompson?

  You have the original Apple at 1976, I believe it was, uh, started the company. They made Steve Jobs and Steve Wozniak. Wozniak's the technical genius. Jobs is the, Jobs is the marketing guy, the idea guy, uh, the sort of conniving one who already ripped off Steve Wozniak at Atari. Uh, but just, uh, all the, all the, you know, a whole package is I think. One way to put it, they start Apple, their first computer is the Apple one, which is basically just a motherboard. You had to provide everything else around it, then the Apple two, Apple two, huge breakout. It was actually a whole computer. It, you could do like the first version, this first spreadsheet was written for the Apple two. It was a big deal. It carried the company actually for a very long time.

• 17:10Ben Thompson?

  It was, it, um, you fast forward, they make something called the Lisa, which is the first graphical user interface. Way too expensive, kind of a failure. Then the Macintosh in 1984. And people think about the Macintosh as being the core of Apple, but actually throughout the eighties was the Apple two. That's what actually paid the bills. Steve Jobs didn't care about the Apple two. That was old technology. He cared about the Mac, was spending tons of money. It was losing tons of money and Steve Jobs gets fired. Uh, the, the, you know, he wasn't focused on the actual core business. He was off here and just, you know, being a pain in the rear end. And so Apple, the Macintosh though, ends up becoming a hit over time as it gets more capable. Uh, you know, it, it gets a huge market in desktop publishing because you get whizzy wig. What you see is what you get.

• 17:55Ben Thompson?

  You could actually develop, you know, design newspapers and whatever on it. So Apple's doing pretty well through the eighties and nineties. In the nineties, they really start to fall behind. Oh, uh, uh, Macintosh OS, classic OS is technically, it has so much technical debt. It was still downstream from the original Mac operating system. If one application crashed, your whole computer would crash. It wasn't memory safe. It was just a total mess and their hardware is falling behind. The Windtel sort of, uh, duopoly is running circles around them. Windows was a technically superior operating system and Intel chips were way faster. It was just better in every respect. It's still, you know, the Macintosh still had that ineffable taste, like people liked using it.

• 18:40Ben Thompson?

  I remember when I worked for the student newspaper in college, I gravitated towards the Macs. I just liked using them and plus I, you know, learned how to use Quark Express and, and lay stuff out. But it, it, verminy tactical perspective, they stunk. And the company is, is flailing around trying to find the next thing. That this is where the vaporware in total absence. of credibility comes from and they're demoing all these things doing X Y Z. Uh, they're on the edge of bankruptcy. There's this famous wired cover of of Apple. The the multicolored Apple logo with like a crown of thorns or or wreath of thorns around it. And it just says prey. It's one of the best magazine covers of all time. It's so good.

• 19:22Andrew Sharp?

  And they had lost like a billion dollars at that point.

• 19:24Ben Thompson?

  They had lost like which back then was a lot of money.

• 19:30Ben Thompson?

  Yeah, this is back when you could talk about tech and also have some understanding of the normal economy.

• 19:36Andrew Sharp?

  Yep.

• 19:36Ben Thompson?

  I do a a skill that I have lost. Uh, so the uh. So they're in trouble. They reverse acquire a company called Next, which Steve Jobs had had started. And Next basically takes over Apple. The reason why this is important is Scott Forstall was a Next guy. He never worked at the original Apple. And he was hired, I think, as an intern with Next. He came up through that. And one of the challenges that that that faced Steve Jobs when he came back to Apple was basically merging Next, which made their own computers. It was an Apple sort of thing, but they were more focused on the high end.

• 20:17Ben Thompson?

  They got a decent market in education, particularly, I think, like universities and things like that. But still mostly a failed company uh with Apple. And you wanted to combine sort of the Apple sensibility and design and obviously the user base with the Next underpinnings, which Next, by virtue of being developed later than the Macintosh, was much more sort of technically forward. It was memory safe. Uh, it it had the it was built on Unix as its underpinning. So it was like this ended up being a huge deal later. It's why developers adopted the Mac. You could have the same environment that you would have on a server, sort of on your local computer. This is before things like containers and stuff like that. And and uh, but there was this real challenge to merge the stuff together.

• 21:01Ben Thompson?

  And there was um, uh, the executive, I think Bernard Sorlay, I believe was the name that was sort of the head of this. And and Forstall was sort of under him a a as his deputy. Again, this young guy who'd come up through Next and is coming in Apple. And I don't know, but I suspect this is where a lot of the anti Forstall sentiments started. You had a lot of the Apple people that did not like this. Yeah, this guy coming in and sort of telling them what to do, but. Jobs appreciated for stall, I think, a lot. Like, when you think about it, you're the guy at top.

• 21:33Andrew Sharp?

  This was the DNA that would ultimately define the new era of Apple, correct?

• 21:39Ben Thompson?

  That's right.

• 21:39Andrew Sharp?

  Like, from an OS standpoint.

• 21:40Ben Thompson?

  The DNA is next. And you go, actually, if you program for even an iOS, there's some functions you call that are NS, da, da, da, da, da. The NS is next step. Like, there's still stuff in here that is, that is from back then. And so, it's funny, I guess, someone asked me on Twitter, like, what's the oldest code in iOS? They went back to, like, the 2000s. I'm like, no, like, there's Unix code in here. There's code that goes back to the 70s. That is, that is it. And that's the case for all your, all your software products. Uh, you would, you'd be shocked and dismayed to understand the underpinnings of.

• 22:13Andrew Sharp?

  Everything is held up on scaffolding that was established in, like, the 1970s.

• 22:18Ben Thompson?

  That's right.

• 22:18Andrew Sharp?

  Yeah.

• 22:19Ben Thompson?

  Uh, but there's lots of next stuff. Uh, but yes, that was the, the core of Apple software going forward. And that core, that kernel, uh, is undergirds macOS today. It undergirds iOS, tvOS, everything else. It's all in this common foundation that is from next. And to the extent that the Apple bit came in, it was more on top of making an aesthetic that you, you, the top menu bar and the, and, and stuff like that. Like, that, that, that was familiar. And when the first OS X came out, a lot of, uh, it was written OS X, but it's pronounced OS X. A lot of Apple people, like, lost their minds. It's like, what are you doing here? This is terrible. But it was obviously, in retrospect, the right thing to do.

• 23:01Ben Thompson?

  So you fast forward and, uh, you know, Steve Jobs, I think, did a very good job of being the decider in chief. Or the editor in chief is the way I always characterize it. He had different people that were fighting each other and going back and forth. And he would choose the way. He wasn't designing it, he was deciding it. And that, I think, is very underrated and underappreciated, how important that was. And that, it, it, Steve Jobs is the one that made this merger of next step's superior technical underpinnings with the Apple aesthetic and design. He made that merger work. That, that merger does not happen without Steve Jobs as a force of nature, making it happen and making the decisions to, to push things forward. And mollifying one group and.

• 23:46Andrew Sharp?

  Right. Managing the factions, of course.

• 23:48Ben Thompson?

  That's right.

• 23:48Andrew Sharp?

  That makes sense.

• 23:49Ben Thompson?

  So you fast forward and Apple's going to do this new project that turned out to be the iPhone. And that, the person that was put in charge of that from a software perspective was Scott Forstall. So he, basically iOS is Scott Forstall's baby. And, and, and just like the hardware in the phone was, or the, the, the tech go underpinnings was Tony Fadell, who had done the iPod, and then you had Johnny Ive doing the design. And you have like these, the, you, you, there's obviously other people in, involved. There's a guy called Bob Mansfield that, that, that features in here. Uh, but Bob's Mansfield, I should say. So anyhow, the, the biggest project ever, right? It or it turns out to be the best product ever. And it's obviously a amazing success.

• 24:34Ben Thompson?

  It's a technological success. It's a software success. It's a design success. The, like, the entire industry copies it. It, it's a, it's software defined hardware where Apple exclusively sells the hardware. And then the software provides the ecosystem and the lock in and all these sorts of things. And a, a total triumph. Scott Forstall led this team in, in the dark, that, you know, suit total secrecy. And they delivered. And within the first year, there becomes this big question. Developers really want to build apps for this. They really want to build apps for this phone. We already have obviously all the APIs because we had to build our own apps internally. And Steve Jobs like, nope, no apps. Uh, and he gets on websites, we got a great solution for you. Web apps, you can save it on your home screen.

• 25:18Ben Thompson?

  And, uh, everyone, I think with the term, I don't remember who coined it. This was the shit sandwich. Um, and probably Gruber to be honest. And then so, uh, you, then people start like jail breaking their phone and figuring out how to run apps anyway. And they're like backwards engineering and like figuring out all the various function calls and things like that to do this. And the big advocate in Apple to allow apps was Scott Forstall. He was the guy that was, of all the Apple executives, was the most pro developer. And I think this is pretty undisputed, where, whereas a lot of the Apple core was more, um, Suspicious of developers and, and this is the key point, which we'll get to in a moment.

• 25:59Ben Thompson?

  So, so that's, so it's a foreshadowing, but he was the big developer advocate. And if you talk to developers back then, particularly senior ones at large companies, they, or, or bespoke companies that made amazing things, they would have an audience with Forstall and felt that he was an advocate for them. And the fact that the App Store existed as it did, and the features that existed for developers and the work Apple did, I think pretty universally, most people ascribe to, to Forstall.

• 26:31Andrew Sharp?

  Downstream of Forstall. So then where was the power struggle where Maps becomes a pretext to force him out? What was the tension?

• 26:39Ben Thompson?

  Steve Jobs died. That's, I think that's the real issue. Steve Jobs had cultivated these warring fiefdoms that over time, after the decade of working together, just hated each other, just absolutely despised each other. But guess what? If Steve Jobs calls a meeting and Scott Forstall is going to be there and you're Johnny Ive or Bob Mansfield, you go to the meeting because Steve Jobs called a meeting and, and you're going to fight and you're going to hate that guy, but Steve will figure it out. And you go to Steve afterwards, say, I'm sick of this. And he's going to say, you know, deal with it or, you know, whatever it might be.

• 27:12Andrew Sharp?

  But yeah, mollifying everybody.

• 27:14Ben Thompson?

  Here's a good analogy for you. Red Bull Racing, right? What has happened to Red Bull in the last two years? You had basically two major factions. You had the Christian Horner faction and maybe Newey was his own faction. I'm not sure. But then you also had the Helmut Marko faction. And as long as the founder of Red Bull was alive, Dieter Maschewitz, I believe that is his name.

• 27:38Andrew Sharp?

  Yep.

• 27:39Ben Thompson?

  It worked. What happened the moment he died?

• 27:43Andrew Sharp?

  Open war.

• 27:44Ben Thompson?

  Open war. And I think, I, I think it's actually a, a perfect analogy of what, what happened in Apple. You have Tim Cook come in as the CEO.

• 27:55Ben Thompson?

  Very low credibility in terms of the actual software. He's the operations guy, right? He can run the company. But that credibility wasn't just internal to Apple. It was also with Wall Street. Wall Street was very nervous when Steve Jobs died. And one of the ways that Apple addressed that was putting Johnny Ive front and center. Don't worry, Steve's gone, but Johnny's still here.

• 28:15Andrew Sharp?

  Here's this creative genius that you guys can trust to.

• 28:18Ben Thompson?

  Yeah, who designed all this stuff, right? And that was the stories. He designed the iPhone, even though I think iOS is more important to the success of the iPhone than the design of the iPhone. Scott Forstall deserves more credit than Johnny Ive does, in my opinion, for the iPhone in particular. The iPod, different story. That is the Johnny Ive crowning achievement. But I would argue it's different when it comes to the iPhone. But Wall Street doesn't have that distinction. And it was actually really, for Apple, they felt it was very important to have Johnny Ive put a foot forward.

• 28:52Andrew Sharp?

  Okay.

• 28:53Ben Thompson?

  I think this was a disaster for Apple. I think Johnny Ive, without someone, without a boss, was terrible. We got the MacBooks with keyboards that didn't work, too few ports. Like, Steve Jobs would talk about function over form. Apple products became form over function. You got the iPhone 6 that bent. You got $17,000 gold Apple Watches. Just unreal. Johnny Ive's brilliant, but he needs an editor. Steve Jobs was that editor. And I just don't, I just think it was a very bad decade for Apple. But what was worse is, and this is all scuttlebutt, just what I've heard.

• 29:35Ben Thompson?

  It basically got to the point where Johnny Ive would not attend a meeting if Scott Forstall was there. It was a him or me situation. And I believe Bob Vance, I mentioned him before. I believe he was in the same boat. He was more on the hardware side, but he similarly. And again, I've had one interaction with Scott Forstall and just as the audience. And I completely believe all the stories based on that one story, okay? So, so you have this-

• 29:59Andrew Sharp?

  But also, you talk about the sort of rudderless decade with Johnny Ive without a editor. That same decade was when developer relations began to sour. And there was no advocate for the developers in that sort of power struggle-

• 30:15Ben Thompson?

  Exactly, exactly. Which I think that that's why we're getting to this whole story. So, Apple Maps launches, you know, it's a disaster. Apparently, the story, the official story, is a demand that Scott Forstall personally take responsibility for it publicly. Which, by the way, Apple doesn't do. That's like, you see that this week with Apple Intelligence. Like, if anyone takes-

• 30:44Andrew Sharp?

  No one's falling on the sword, yeah.

• 30:46Ben Thompson?

  Yeah, no, it's the CEO. That's the whole structure of Apple, being a functional organization. The CEO is the head. It's, Apple is a, to use another F1 analogy, it is, it is a Red Bull car that's super pointy on the front end that no normal driver can handle, but Max Verstappen can. And it, and that driver was Steve Jobs. And, and, and, you know, part of the process when he was gone was reshaping an organization that couldn't stick together without him. And because of that, I think you can make a strong argument that Forstall getting fired was the right thing to do. Because the priority then was to keep the company together in a very uncertain period

• 31:30Ben Thompson?

  when it was a company that was tuned to run around Steve Jobs and Steve Jobs wasn't there. They had to figure out a way to keep going. The problem is that Apple lost its one, its biggest internal developer advocate. The guy that actually stood up for Apple, said, or stood up against Apple, like the Apple within Apple, and said, "No, actually, developers matter. We have to do things for them. We have to think about them." And I, I, I do think this is where all the developer stuff really started to, to, to go off the rails. There's just no one in Apple who, who is truly a developer advocate at the senior levels, as far as we can tell. Again, just knowing the executives who've been around for a long time.

• 32:15Ben Thompson?

  And when you look at the actions, like they just don't do stuff that's friendly to developers. They do stuff that's friendly to Apple and you have to take it or leave it. And it was okay because the iPhone was so dominant. They could get away with treating developers like crap. And developers would still build apps for Apple. They would dig them out for the iPhone because the market was so large, they had no other choice.

• 32:35Andrew Sharp?

  Okay, so before we move on, there was another aspect of Apple history that I want to hit before we return to Apple today. So this is a keynote address that Steve Jobs delivered at the Macworld Boston Conference in August 1997. I'm going to play the clip for you.

• 32:55Speaker 02

  You know, where we are right now is we're shepherding some of the greatest assets in the computer industry. And if we want to move forward, it's the Apple healthy and prospering again. We have to let go of a few things here. We have to let go of this notion that for Apple to win, Microsoft has to lose.

• 33:26Speaker 02

  We have to embrace a notion that for Apple to win, Apple has to do a really good job.

• 33:36Speaker 02

  And if others are going to help us, that's great. Because we need all the help we can get. And if we screw up and we don't do a good job, it's not somebody else's fault, it's our fault. So I think that's a very important perspective. I think if we want Microsoft Office on the Mac, we better treat the company that puts it out with a little bit of gratitude. We'd like their software.

• 34:04Speaker 02

  The era of setting this up as a competition between Apple and Microsoft is over as far as I'm concerned. This is about getting Apple healthy. And this is about Apple being able to make incredibly great contributions to the industry to get healthy and prosper again.

• 34:21Andrew Sharp?

  Now, I know that's a famous clip, but I'm curious and obviously the the famous quote there is we have to let go of this notion that for Apple to win, Microsoft has to lose. What was the context for that concession and how does that history inform where Apple is today?

• 34:39Ben Thompson?

  I asked you to play the longer clip for because exactly what you said, people know that one line, but I think the whole clip is super important. And I think this is the the single most important clip for understanding Apple's developer relations. Whatever you want to call it. Continuing flagration.

• 34:58Andrew Sharp?

  Developer, yeah, tensions.

• 35:01Ben Thompson?

  So you go back to the Apple II, right? Visicalc, first ever spreadsheet. Visicalc sold Apple II's. They sold a ton of them because Visicalc was incredible. You could put numbers in and they would calculate for you right there. It was amazing. Normal people, this is, this is normal people programming. Like you don't realize your program, but your program, you're doing if then statements, right? Amazing stuff. And you fast forward, I mentioned desktop publishing. Photoshop ran on a Mac. You would get a Mac so you could use Photoshop or Quark Express or whatever it might be. And yes, they would port it to Windows, but it wasn't nearly as good. And the Apple font generation was better. This is a famous Steve Jobs anecdote about his attention to detail in terms of Macintosh

• 35:43Ben Thompson?

  font rendering and it had more colors and it was just better. And and and people, and so you, Apple was a platform that had these applications selling their devices on their behalf.

• 35:57Andrew Sharp?

  Yeah.

• 35:58Ben Thompson?

  The problem was as they fell further and further behind, these applications and Microsoft Office and the Adobe Creative Suite are the two big ones. Of course, they went to, they went to Windows, Microsoft for obvious reasons, but Adobe, like, why would they not? They wanted, they don't want to be dependent on Apple and and particularly as Apple hardware is sucks, someone's going to come along and build it on Windows and then they're screwed.

• 36:20Andrew Sharp?

  Much bigger market, yeah.

• 36:22Ben Thompson?

  And so, but those were the applications that sold Macintosh devices. And so if they were on Windows and Windows Was faster and memory safe and all these sorts of things. Yeah, like, like, like, that's why Apple was going bankrupt in the 90s. And Steve Jobs comes back and there was a, they were so far behind. Cause it took, it took like six or seven years to get next step to OS 10. They were stuck with classic OS on slow computers. And on the verge of going bankrupt when Steve Jobs shows up. And a new version of Microsoft Office had come out on Windows.

• 37:03Ben Thompson?

  A new version of Photoshop and Illustrator and whatnot was coming out on Windows. And there was no economic reason for either company to, to update their applications on the Mac. The market was too small, the, the operating system was too crappy. It just wasn't worth it.

• 37:21Andrew Sharp?

  You're right.

• 37:22Ben Thompson?

  And if the Mac didn't have those applications, Apple was dead.

• 37:28Ben Thompson?

  Steve Jobs had to get on his hands and knees figuratively. And beg these two companies to put their apps on the Mac. And if, if you actually get a visual of Mac world Boston, the other thing that's famous about this is, is Bill Gates comes in via satellite. And it's this, you know, he talks about how not, we're going to update Office and we're going to invest in Apple. And, you know, I think in retrospect, it was an anti, it was probably an anti, uh, uh, an attempt to avoid antitrust. Because like, what, Apple's there, they're a competitor. They had to keep Apple alive for that to, that to happen, right? And so, but the visuals are striking.

• 38:11Ben Thompson?

  You have this looming visage of Bill Gates looking down on the stage. This little Steve Jobs looking up at the screen. And it's, it's humiliating for someone who thought Bill Gates.

• 38:25Ben Thompson?

  Who was certainly a peer, but whose Jobs I don't think respected at all. Felt that they had ripped him off continuously. And just a, you know, just a copycat that abused their relationship with IBM to kill us. And it's not fair. I mean, he had to, he had to look at him up there telling people that we're investing in Apple. We're saving Steve Jobs rear end. We're going to put Office on there. And he had, and people were booing. And he had, and that's why he gave this, I think this part of the speech is sort of off the cuff.

• 38:56Ben Thompson?

  And what I emphasize, the reason to pull the whole clip, it's not just the, we can both succeed here. There's a number of phrases are, you know, where we are right now. If we want to move forward and see Apple healthy, we need all the help we can get. This is about getting healthy. This is Apple and Steve Jobs desperate and needy for a third party developer to come in and, and not kill their, their platform. And, and when I mentioned my Apple University experience, I mentioned that wire cover. And I mentioned this speech. One of the most interesting things about being at Apple, this was again, 2010. So Apple has been, been doing great. The iPod's been killer. The iPhone is just starting to explode.

• 39:40Ben Thompson?

  It's obviously the next big thing. You would talk to younger people and they were all optimistic and we're taking over the world. Greatest company in the world, yeah. You would talk to the older people who were at Apple in the nineties. And unprompted, they would bring up that cover and they would bring up the speech. And, and just, it's like depression era babies who hoard for the rest of their life because they never want to be in that situation again. That was that level of employee who today are the senior executives at, at Apple. And some of them have retired, have moved on. So I think it's, it's fewer and fewer over time. But it's this sense of.

• 40:22Ben Thompson?

  That was the worst experience of my professional career. And Apple means so much to people. It's tied up in their own identity. So it's like the worst experience of their life. And we will never, ever again allow ourselves to be in that position. And that's why I think Steve Jobs didn't want apps in the iPhone. It's like, we have a killer product here. We're not going to create the conditions for someone to ever put us in the position that Microsoft and Adobe put us in the 90s. Not gonna happen.

• 40:46Andrew Sharp?

  We're never gonna be beholden to developers.

• 40:48Ben Thompson?

  That's right. And one of the critiques I had, even on the App Store when it came out, is they would do lots of stuff for games and they'd brag about the numbers. And I'm like, why are you doing this? The games are trivial to port to Android. The engine maker takes care of the problems of compatibility. And the assets, the game takes over the whole screens. There's no UI commonality. I'm like, Apple should be investing in productivity apps. These are the apps that make you, that you can optimize for a platform and it locks you in. And, and they just never did anything. They never had, it took them years and years to have trials.

• 41:24Andrew Sharp?

  But those apps also have a different business model that wouldn't lend itself to the iOS platform.

• 41:30Ben Thompson?

  That's right. They need subscription pricing or they need upgrade pricing. So you can just, because you're not going to reach the whole world with these. You're going to reach a core base and you need to make money from that base over time. And so at this time, in 2013, I wrote this article, they didn't exist. And, and to me, this was an obvious thing that needed to be done. It would drive iPhone differentiation. But what did I just say? These are apps that people love, that they build their careers around, that they lock in on. And I believe there's a, there's lots of details here. The App Store is built on iTunes, this old system. To do all this stuff was hard and tricky. And, and there's technical reasons that a lot of this didn't exist. But I also think psychologically, Apple did not want to do it. They did not want to enable.

• 42:12Ben Thompson?

  Apps that that became the most important application in your life.

• 42:16Andrew Sharp?

  It's fascinating backstory. After 8,000 conversations between you and I about the App Store, I didn't know about some of what happened in the mid 90s and the way that informed the executives thinking on this issue, but it all makes sense.

• 42:33Ben Thompson?

  This is my, to be clear, this is my supposition. There's no, no one is saying this.

• 42:37Andrew Sharp?

  Reiterate the disclaimer. This is psychoanalysis.

• 42:40Ben Thompson?

  The one guy who was, who, who, who didn't think that way, again, the grant land of executives, was Scott Forstall. I think he, he was locked in iOS. He wanted iOS succeed. He saw the value of being a platforming. So he's the one that fought for developers. He fought for the App Store to exist. And I don't know, but I would like to believe he fought for better business models, for productivity apps. Let's actually enable amazing new applications that are only possible on these devices, right? What's the problem with the iPad? All the applications, there's no application that truly takes advantage of this. And, and people tried to start companies and you realize that it's just not doable. If you can only sell an application once, which was the case back then, you, you're, you're going to run out of customers and then

• 43:24Ben Thompson?

  what, right? And, and so, yeah, I, I think that, again, maybe we're pinning too much on one person, but Apple has just never since then been developer friendly. And it was fine with the iPhone again, because the iPhone was so good and so big. And I've talked about how people would miss, I got a lot of traction early in check three by saying the iPhone is not doomed. Everyone's like Android is going to kill it, just like Windows killed the Mac.

• 43:53Ben Thompson?

  Windows came first. That's what people don't get. Windows didn't come first. DOS came first. And DOS was locked via IBM. DOS was huge in ad applications before the Mac even existed. That, so the, when Windows layered perfectly on top of DOS, it was backwards compatible, ran all your old applications. They had a lock-in before. That wasn't the case with phones. The iPhone came first. It came before Android. Android was after that. It was a completely different scenario and there was no enterprise lock-in like, like Windows basically stole wholesale from IBM. Like Android never had that. And so of course the iPhone, the iPhone was, was, was going to be fine. And Because of that, because they were first and because they they got developers on board,

• 44:38Ben Thompson?

  they could get away with treating developers like crap. Again, the market was so large, there was so many users and Apple's, the core functionality was so great that Apple, and so what do you have today? You might have more and more executives that were not there in the 90s. And so they maybe aren't as paralyzed as some of the most senior exec, Apple executives might be subconsciously. What you have is almost worse. You have people that have been, their entire career has been spent treating developers like crap and getting away with it.

• 45:11Andrew Sharp?

  I was gonna say, like, the the culture over the last 15 years hasn't been much healthier in terms of understanding the value of developers. Well, okay, so this is all context for what you wrote this week and what you mentioned on Monday's episode, which is that if Apple wants to capitalize on its AI potential and also, and when we say capitalize on its AI potential, like, they have hardware that in theory, over the next several years, should be great for running AI locally. So I'm gonna read two emails to you. First, Sergey says, hey, guys, I've been loving the Apple discourse, but I think one issue has been absent. Apple does not make innovative software. Given that AI is software, think about it.

• 45:56Andrew Sharp?

  What was the last software product by Apple that was truly innovative? Sure, they have good enough software and it's made better by their advantages, like platform lock-in, privacy stance, et cetera. But when was the last time Apple wrote some consumer-facing software that felt like magic? Honestly, my answer is the first iOS. It's been a while, 18 years. So again, shout out to Forstall there.

• 46:20Ben Thompson?

  That's right. He's basically saying Apple has not made any good software since Forstall left.

• 46:24Andrew Sharp?

  Yes, and then Jens in Sweden says, on Tuesday, Ben wrote, yes, Apple has cloud services and yes, they are serviceable and not an embarrassment like they used to be, but they're hardly the company's forte. This statement is much too restrained, Jens says. They are all garbage and probably due to No one caring about the backend of these services since the iTunes Store was launched in 2003. And then Jens, this was a very thorough email. He lists five examples of Apple software issues. He actually included screenshots as evidence. And then he closes by saying, "Since both the important Johns in the Apple universe, Gruber and Syracuse, have been unapologetic regarding Siri and Apple Intelligence,

• 47:08Andrew Sharp?

  I now expect an Apple focus group like they once had for the Mac Pro." Quote, "Can you please help us understand how people want to use voice assistants? We all have our real personal assistants and don't know."

• 47:23Andrew Sharp?

  So I read those emails because each of them made me laugh. And then each of them also made me angry at myself for not thinking harder about Apple's failures when they first announced Apple Intelligence. Because when you really step back and look at Apple's attempts to innovate in software, there's more bad than good over the past 15 years or so. And to your point earlier, like the iPhone, all of the best software on the iPhone comes from the App Store. And so even making modest improvements to the iMessage experience has looked like a Herculean task for Apple.

• 47:57Ben Thompson?

  Oh, it's so bad. I've convinced you over the years to use WhatsApp. And once you use WhatsApp heavily, iMessage is painful.

• 48:05Andrew Sharp?

  You look at iMessage, like, how is it this bad? Exactly. Again, we're talking about the most valuable company in the world. So.

• 48:12Ben Thompson?

  No, it's a great, it's a great example of incentives, right? WhatsApp is very heavily incentivized to make it a great experience because they have to get you to install it and join it. Apple is just there. And it's a great object.

• 48:25Andrew Sharp?

  Well, and Apple Intelligence is just there for the time being. But in terms of actually capitalizing on good AI hardware, you mentioned empowering the developer ecosystem. So what would that look like in terms of like the practical steps to make that a reality?

• 48:43Ben Thompson?

  I think Sergey puts his finger on something important, which is Apple historically, or at least since the NX step.

• 48:53Ben Thompson?

  And a next step acquisition is amazing at software. The software they're amazing at is the operating system itself. Now, again, there's lots, I'm not going to get into a holy war about all the aspects of OS 10 that are good or not, or Mac OS versus Linux versus Windows. There's all sorts of things that are important to different people. What I will say from primarily a user perspective is OS 10 combines just a core ease of use with an incredible extensibility that lets developers fill in all the holes or even do replacements. But with a library of capabilities and UI elements

• 49:38Ben Thompson?

  that makes it all fit together and feel cohesive in a way Windows doesn't. I think I mentioned this before, when I went to Microsoft and had to use Windows, people would ask, how is it? I'm like, I missed third-party apps. And they're like, what? Right? The third-party apps on Windows are slap stuff together for a line of business application. It doesn't fit the operating system, but it works. It functions. And Apple ones, you could get a third-party app to replace Apple functionality. Some of this stems from classic Macintosh as well. That fit in. It looked like it was built by Apple because Apple's frameworks and all these things were so good.

• 50:11Andrew Sharp?

  And it's all so intuitive to use. I mean, that's one of the reasons it's the most successful company on earth now. It's like anybody can pick up an Apple and it feels easy. And that is a software triumph.

• 50:24Ben Thompson?

  Yeah, I mean, and I think a lot of people would argue that is less and less the case over time. That was more the case sort of a decade ago, but we're used to it. So it's sort of okay. And there's still things like, you know, I remember when the iPhone 10 came out and had the facial recognition and you could look at it and your messages would be, your notifications would not show the message, but if you looked at the phone, it would show the message because it had verified it was you. So it could like, you know, safely show the contents of your text messages. And I wrote an article like, this is Apple at its best. This is amazing. Like it's hardware, it's software. It's this delightful experience that you get by controlling both.

• 51:04Ben Thompson?

  And the key thing about integration is you, there's tremendous value to be driven by integration. And, you know, another early Stratechery things, you know, arguing why the disruption thesis about Apple was wrong.

• 51:18Ben Thompson?

  A lot of the examples of disruption are about enterprise examples where people are buying things based on speeds and feeds and spreadsheets, the analytical mind, as opposed to consumers who like to look at their phone and see it expand. Wow, that's so cool. That's delightful. I now have increased affinity for for this company that gave me this experience. And you deliver that with integration and you can integration people, the first iPhone depended on integration. It was so relatively speaking, underpowered and had so little capability and the battery life was so bad, you had to wring everything out of the operating system to make it work. Like the early androids were just horrific in terms of these sorts

• 51:59Ben Thompson?

  of things because they were trying to do a modular approach when the just stuff wasn't good enough. You fast forward today, it's good enough, right? But but the other thing you get with integration is is surprise and delight that that is really compelling. The thing with integration, though, is it's dangerous to integrate too far because the further you integrate, the more brittle everything becomes because you're tying stuff together. Part of the whole magic of integration is you can use duct tape and glue and get it to work and deliver something that people who are trying to use standardized interfaces and Lego type constructions can't do.

• 52:36Andrew Sharp?

  Right.

• 52:37Ben Thompson?

  But a Lego type construction is sturdier than trying to glue something together, right? If you're gonna build one of those five foot Lego things, you can do it because Legos stick together in a predictable, structurally efficient way. Trying to do it with like sticks and glue and popsicles or whatever it might be, you're limited in actually how big you can get. And I think this is a failure case for Apple and for integrated companies. They try to integrate too much. So Apple's now, it's not the integration of hardware and software, it's hardware, software and services. And now we're dependent on iCloud. And that gets to Sergey's point in here. And and it was really rough for a long time. And I'm gonna take a middle ground. It's mostly functional, although there's an app

• 53:20Ben Thompson?

  I was using this week where iCloud sync was failing on it. So who knows? But but there's you're extending yourself into things that are hard to do that really reap no benefit? What's the benefit to Apple? Oh, they can make more money. They can they can lock more like they can lock you in on further levels and the apps are tied to iCloud and you have to use iTunes billing or App Store billing and it's. It's less about delivering a compelling user experience and more about what's good for the company.

• 53:49Andrew Sharp?

  Right. Well, and also you're assuming full responsibility for what's now a failed product rather than...

• 53:55Ben Thompson?

  Well, we'll get to Apple Intelligence in a little bit, but even things like email clients or the various, all the walk-in Safari that Apple's had on their devices. Again, there's reasons to do it that way. I think with Safari in particular, I'm somewhat sympathetic to Apple's desire to control rendering technology, given how deep that goes into the operating system and the impact and everything, things like battery life and stuff like that. But when you're controlling, you know, but you're also, you're cutting off innovation, you're not developing features because then people have to build apps instead. Like, there's lots of problematic, lots of problematic aspects to this. And

• 54:35Ben Thompson?

  Apple Intelligence is this trend taken all the way to its very problematic end, which is we have to do it. We have to do it all. And my argument is no, you don't. Google needs to do it. Google's entire theory of the case in many respects for Android is the unification, they have their own point of integrations. It's the operating system and their services. They work seamlessly together on an Android phone. Not compelling enough to switch to Android for a lot of people, but it is a better experience. If you use all Google stuff, Android's painful if you use not Google stuff, like just like you use like out like Exchange or iCloud, God forbid, or whatever.

• 55:17Ben Thompson?

  But if you use all Google stuff, it all works. That's what you expect from a point of integration. But now you add on AI and Google has this amazing infrastructure advantage in the cloud. They have like, they can deliver things more cheaply and more efficiently, so they can credibly start to offer this. And if you have all your stuff in Google, you go all in on Google. I fully expect Android's going to deliver a really compelling experience in the next few years. It's going to get really amazing and Google Assistant's going to know a lot and is going to actually be able to do the demos that Apple show or the Apple show, or it's not a demo. The vapor, the videos Apple showed and could not demo.

• 55:54Andrew Sharp?

  They'll be doing it in real life on a live stage. Yeah, okay.

• 55:57Ben Thompson?

  And because that's what they're good at, that's their point of integration. What Google can't do is they can't... You're gonna be dependent on Google. You're gonna be dependent on Google's cloud. That's how they're going to pull this off. They're gonna pull it off on high-end devices and on low-end devices and everything in the middle. They're not going to assume you have good hardware. Sure, they'll say buy a Pixel phone will be a better experience. It's not gonna make that much of a difference because their model is it has to run everywhere. Apple's bit is, oh, we have hardware. We can do it on-device. Here's the problem. If Apple's doing it all themselves,

• 56:32Ben Thompson?

  who's the winner from doing it on-device?

• 56:36Ben Thompson?

  Apple, because they don't have to pay for the servers, right? They're, they're, they're internalizing the benefit of having good hardware by basically being cheap. The problem is, it's gonna be worse because it's running a small crappy model on a very low-powered process or relatively unpowered, well, actually, the process is very powerful. Unlimited amount of memory is the real issue. And okay, we'll do it in private cloud compute. That is certainly a cost center for Apple, so that is a little more credible. But it's interesting that their whole approach, actually, the benefit accrues to them in saving money relative to Google, who has to do it all in the cloud. But if you do it all in the cloud, you get better performance and you have all this stuff there. So Apple is, in some respects, from a product capability perspective, already have, has an arm tied behind their back by trying to do it on-device.

• 57:21Ben Thompson?

  Who, how could you actually though benefit from doing it on-device? Well, what about third-party developers? Are they gonna pay? It's really expensive to have a cloud service. You have to pay for GPUs. We just want like one guy operations, like Marco Arment and Overcast. How can he have AI in his application? He's like, like this, well, what if he could run it locally? If it's locally, it's free. You have to pay for the electricity, but that doesn't really count, right? It's effectively free. This, and Apple can credibly promise a certain level of performance because they control all the hardware. It's gonna be A18 or better.

• 58:02Ben Thompson?

  And Apple can do things like, oh, we know this is being installed on what kind of device? It's going on a Mac or it's going on an iPad or it's going on a computer? And we can, you know, sort of gate different capabilities and functions based on the device that it's going to. And oh, by the way, we can have this backup to Apple compute and we'll sell that to you as a developer. You can make a subscription app and that will help you pay for this. Like there's, it's just a very, having...

• 58:28Ben Thompson?

  From an Apple perspective, from an Apple intelligence perspective, on-device is a detriment. It makes a worse service relative to Google. From a developer perspective, it's amazing. I get free inference. Even so, even though it's crappy, it's free. It that lets me do stuff I couldn't do otherwise. And Google can't deliver that because they don't know what the devices are. They don't know if it's good or not, so they're all cloud and it's all Google. Apple, why do they want to compete with Google at what Google is good at? It's strategically nuts. What they should do is capitalize on what they're good at, which is predictable, high-end hardware that they can deliver to developers to create things that no one could imagine or think of

• 59:12Ben Thompson?

  because they have it for free. It's right there, a new capability. All the Apple intelligence models that are running on an iPhone should be purely open to developers. Don't gate it. Don't make it image playground. That's a piece of garbage and it's all edited and censored. And oh, you could implant this in your app. Who wants that? No, give them the pure model. Even if it's crappy, see what people could do with it, right? Even if they do stuff you don't like, that's not your problem. You're a platform. They're, that's the app maker's responsibility. You deliver the API, you deliver the credibility and you let the developers solve this problem just like they solved the problem for the Mac back in the day. They created VisiCalc, they created Photoshop. And the problem is Apple is led by people, number one,

• 59:56Ben Thompson?

  who I think are scared of third-party developers. Or two, have grown up treating them like garbage and them still serving them anyway. What they need is developers to come in and do things on an iPhone that they can't do anywhere else because Apple makes amazing hardware. It's an amazing opportunity. The whole AI space is crying out for products. It's crying out for imagination. It's gated by the fact you can't iterate and experiment because this stuff costs on a marginal basis. Apple can solve this problem, not just for them, but for the entire industry, unleash an entire wave of innovation. And I don't think they're going to because the executives' mindset about developers is totally screwed up. And we've been warning about this for ages.

• 1:00:40Ben Thompson?

  This is the final payoff for treating developers like crap for 15 years. It's not just that developers dislike you, it's that you've learned it's okay to treat them like crap and it doesn't impact you. Guess what? It's going to impact you now.

• 1:00:51Andrew Sharp?

  Yeah, well, and I mean, I go back to the email from Jens and his mock focus group. Can you please help us understand how people want to use voice assistants? We all have our real personal assistants and don't know. Offloading that responsibility to an ecosystem full of developers seems like a win. And it's one of the reasons this conversation is interesting to me. And your argument is worth reiterating just because my gut instinct is that a version of this story applies to AI innovation more generally, where the more widely dispersed approach to innovation is going to create better products than an ecosystem that's controlled by a handful of large companies.

• 1:01:33Ben Thompson?

  It's an amazing opportunity. Again, the whole industry is crying. You could imagine entire products of AI products that start on an iPhone that where people have access to this free inference. They experiment.

• 1:01:43Andrew Sharp?

  This is where everybody does their computing these days.

• 1:01:44Ben Thompson?

  And then people come along and say, oh, now what if you do this on a data center with huge things? And these ideas are, it could be this tremendous well of innovation. Apple is the only company that could deliver this. And it's, it's, this is why I'm passionate about it. It's because Apple is so screwed up, in my opinion, psychologically about third-party developers and in opposite directions that the cost, this is the company that used to lead the way, that established, that led the way with the GUI, that led the way with the iPhone, that led the way, and they have an opportunity to lead the, lead the way for AI product development. Again, they don't need to lead in models. Models are being commoditized.

• 1:02:29Ben Thompson?

  There's lots of like models are out there.

• 1:02:30Andrew Sharp?

  It's a better business for them to not try to lead in models.

• 1:02:32Ben Thompson?

  Yeah, they could. And so they could do so well in AI without spending all this capital expenditure everyone else is. They, there's open source models out there. Like in Apple, there's a part of them that gets it. They, one of the interesting people that they sent studios to, they sent two 512 gigabyte memory.

• 1:02:51Ben Thompson?

  Studio Max to the guy who started, I think, EXO Labs or something like that. Basically, it's software that lets you connect two Macs together so you can share the memory pool. And he's up there on Twitter showing two Mac Studios running the full version of DeepSeek R1. Like, it's, the performance is amazing, but it works. And it's incredible that it works. And this is only going to get better. The capability of a model that can run on an iPhone, even in 16GB of RAM, is going to get better and better. Like, this is something where Steve Jobs used to love the Gretzky quote, "You skate to where the puck is going." The puck is going to an amazing place. And Apple's, oh, Apple itself is holding itself back by saying, "We will do it. We will make the apps. We will make Apple Intelligence."

• 1:03:35Ben Thompson?

  Despite the fact, number one, there's no evidence they can actually do this either now or historically. And number two, the whole idea is you, no one knows what needs to be built. You need to harness the crowd. You need to unleash developers.

• 1:03:50Andrew Sharp?

  That's what I find really interesting. I mean, because the Apple mistakes are obviously interesting in the context of Apple's history and Apple's present and their future.

• 1:03:59Ben Thompson?

  Right. Google is capable of doing this, but they're not going to invent everything that needs to be invented because they're one entity. You need experimentation. You need to unleash developers in a way that happened in the 80s. Like, when PCs came along, people didn't know what they'd be used for. You needed developers just making stuff, all this stuff, like the whole desktop publishing thing. When the Macintosh was grid, yeah, they had Mac Paints, but no one actually thought, yo, that had to be invented by someone because there was a platform on which to build. Platforms are the most valuable entities there are because they don't just make money for themselves. They unleash and create the conditions for innovation. Apple used to do that. They don't anymore.

• 1:04:37Andrew Sharp?

  Yeah, yeah. Well, and it's, to me, it's a parable about the value of diffuse knowledge and access. And then also, the Apple Intelligence disaster is the risk of going the opposite direction and being really controlling, really risk averse, and trying to do all of it yourself. So unfortunately, you've just given me a lot of different reasons why Apple is not going to adopt any of your suggestions this week, which did make me more excited for the future of AI. And I hope that at some point, Apple comes to its senses on this front because I-

• 1:05:11Ben Thompson?

  Yeah, it might be a leadership transition at some point, honestly. Like, it just, there's- And Apple's great, right? They're making a lot of money. There's, there's, this is the hard thing about making changes, you know, like, like, who is going to be the site in a dollar that comes in and says, no, actually, Windows centricity is well and truly dead. We have to go forward. You know, Tim Cook has had a better run than Steve Ballmer for sure, particularly from a stock price perspective. But, uh,

• 1:05:41Andrew Sharp?

  I mean, that's the thing.

• 1:05:42Ben Thompson?

  There's an old mindset that needs, there's an old, there's a somewhat old mindset that needs to go. And there's an ancient mindset that needs to come back.

• 1:05:50Andrew Sharp?

  Yeah.

• 1:05:50Ben Thompson?

  That makes sense.

• 1:05:51Andrew Sharp?

  Yeah. I mean, look, they're locked into a business model that has made developers hate them and mistrust them. And they're now making so much money in that area.

• 1:06:00Ben Thompson?

  I just, it just occurred to me. The, the Microsoft analogy actually goes deeper. Satya Nadella, the original Microsoft was a developer tools company. And that's in many respects what Microsoft, Satya Nadella took them back to, away from the Windows company, back to being a developer company. Apple, in this regard, needs to get away from being the, the App Store iPhone company and back to being the platform company. It's not, it's not, it's not perfectly analogous, but there is a bit where you, companies don't become new things. But what you can maybe hope for, and Microsoft gives you hope in this regard, is you can dig up old things and become them once again.

• 1:06:41Andrew Sharp?

  To the DNA. Yeah. Okay. Well, that is an optimistic note to end on. So I'll take it, you know, maybe Apple, it may take a change in leadership. I think that is a good take to go out on. In any event, we will revisit all of this in the weeks to come. A lot to chew on.

• 1:06:59Ben Thompson?

  Yeah, I know. We did a lot of Apple the last three times, but the reason I messaged at you is because I mean, we, you're relatively, relatively new to tech, it's new to sharp tech, but I think this is in a context that actually undergirds so many of our conversations that is worth sort of getting on the record. And I think it's sort of more pertinent now than it's been in a long time.

• 1:07:17Andrew Sharp?

  A hundred percent, particularly as the stakes for developer relations get higher in the years to come here. I did want to end, Jens had a postscript. To his earlier, very comprehensive takedown of Apple and its cloud services. He said, "Sharp Tech is one of the highlights of my podcast feed. Together with the F1 podcast, Bring Back V10s. Please keep it up." We will keep it up, Jens, and thank you for making me aware that there is an F1 podcast called Bring Back V10s. That's a great sentiment, a true hardcore F1 sentiment.

• 1:07:53Ben Thompson?

  I've never listened to it, but I already like it.

• 1:07:55Andrew Sharp?

  Yeah, exactly. They get an endorsement from the both of us. All right, Ben. Well, on that note, enjoy the Australian Grand Prix this weekend. You've been sandbagging very hard about all the success that Red Bull and Max Verstappen are not going to have this year.

• 1:08:12Ben Thompson?

  No, I mean it seriously.

• 1:08:13Andrew Sharp?

  Excuses. I know.

• 1:08:14Ben Thompson?

  McLaren, McLaren, the only reason they didn't win last year is because it took them until seven or eight races into the season to start to dominate. They're not going to dominate from the beginning. It's not going to be close.

• 1:08:24Andrew Sharp?

  There you go. Congrats, Lando Norris, on your 2025 driver's championship.

• 1:08:29Ben Thompson?

  Actually ends up winning, which would be amazing. I'm an Oscar fan.

• 1:08:34Andrew Sharp?

  Australia's own, Oscar Piastri. In the meantime, continue sending us emails, [email protected]. Ben, have a great weekend, and I will talk to you next week.

• 1:08:45Ben Thompson?

  Talk to you later.