(Preview) The Continuing Adventures of OpenAI, Apple’s Trade Secrets Lawsuit, Q&A on Mainframes, Meta, Daylight Savings Time

On today’s show Ben and Andrew begin with a raft of OpenAI news, including reactions to the first reports of what OpenAI’s first hardware product will be, the logic of OpenAI’s hardware business generally, the Codex push in the mac app, and a request for a Codex computer. From there: The Apple-OpenAI trade secrets lawsuit, including Apple history, a reckless OpenAI employee, and the funniest part of the complaint. At the end: IBM’s stock and the specific way AI may have affected mainframe spending, how AI will manifest in real-world software, an email about Meta’s messaging as a recruiting pitch, notification management, monetizing expertise, and a word about daylight savings time.

• 0:00Speaker 00

  Hello and welcome to a free preview of Sharp Tech.

• 0:08Speaker 00

  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?

• 0:19Speaker 01

  Feeling incredibly smug.

• 0:21Speaker 00

  Okay.

• 0:22Speaker 01

  Smug and proud of myself right now. Just you, you've made my day. No, you haven't made my day, you've made my year.

• 0:29Speaker 00

  How so?

• 0:30Speaker 01

  You are on, you know, your traditional summer trip somewhere in New England. I don't want to know.

• 0:37Speaker 01

  Beautiful setting, great cabin, great video background. And your internet is absolute garbage. We are on like the fifth take here trying to record this podcast. I think we're on your cellular hotspot right now. And do you know why your internet is garbage right now?

• 0:52Speaker 00

  Because I do not have a Starlink, that's why.

• 0:55Speaker 01

  Because you're on cable internet. And I almost certainly what is happening is your neighborhood is saturated. You're just randomly getting dropped. All the things that happened to me. And you know what's not happening to me on any conversation for the last nine months?

• 1:09Speaker 00

  Oh, boy. Living the fiber dream out there.

• 1:13Speaker 01

  Dude, I'm just saying, I'm just saying like, it was ridiculous. It was ridiculous that I spent the money to get this done. But every time someone else suffers, then I just didn't feel great about myself. So I thank you, I appreciate that. Retroactive justification for me spending ridiculous money to get fiber into my house. But.

• 1:29Speaker 00

  Absolutely. Look, I'm glad that my personal pain as I sit here squirming with the worst effing internet on the face of the earth. Our collective pain as a podcast team, I'm glad that at least it validates your individual choices out there in Madison. I'm ready to hop on a flight to get back to my fiber internet in Washington, DC. But here we are and we have a lot to get to.

• 1:56Speaker 01

  We are going to look into the backup Starlink for you as you travel going forward. I'm telling you, greatest technology ever. Anyhow, I do have.

• 2:03Speaker 00

  It's never sounded better to me, just for the record.

• 2:06Speaker 01

  You have on the rundown. Before we begin, I'd like to formally recant a take.

• 2:12Speaker 00

  That's right.

• 2:12Speaker 01

  What is this?

• 2:14Speaker 00

  Taking it on the chin, left and right here. No, look, a couple of weeks ago on the podcast, you asked me whether OpenAI had been overtaken by Anthropic in the tech takeability rankings. And in a regrettable moment, I said that yes, they probably have. Anthropic is the new number one for tech takeability at war with the US government every other week. What an idiotic thing for me to say or even think to consider the possibility that anyone in the history of the world would ever unseat OpenAI in the tech takeability rankings. Here we are like three weeks later, I regret all of it.

• 2:56Speaker 00

  I apologize to Sam, to the audience, everyone, I regret the error.

• 3:00Speaker 01

  I regret your apology. What, no, this, this, no, I'm sorry. This is what you should have said.

• 3:05Speaker 00

  Okay.

• 3:05Speaker 01

  You should have said, you know, Ben, just like you are proud of your fiber internet. I am proud of the role I played in OpenAI's recent news. There was a moment where they were just not making enough news. And to motivate them, to give them a kick in the rear end, I said that Anthropic was more takeable than they had. Did I believe that? Of course I didn't believe that. No one will ever surpass OpenAI, but they needed some motivation.

• 3:36Speaker 00

  I was coaching.

• 3:36Speaker 01

  I delivered it and they came through. So good job, Sam. I'm glad that you take coaching. You are definitely number one. I never questioned you.

• 3:44Speaker 00

  Filled with the fire, ready to go get sued by Apple and be great again. Here we are, I love it, yes.

• 3:51Speaker 01

  Anyhow, where do we start? Do we start with Apple?

• 3:54Speaker 00

  Well, we do, well, no, we're not going to start with Apple. We're going to start with the competition that Apple is worried about. Obviously, this is not the only OpenAI hardware news of the past seven days, but I want to start with a headline from Mark Gurman. He wrote, "OpenAI's first device will be a movable, screenless speaker built as AI companion." And he writes at Bloomberg, "OpenAI's much anticipated push into consumer devices is slated to begin with a mobile, screen-free smart speaker designed to be a new type of home computer for the AI era. The product, still under development, is meant to serve as a human-like AI companion that lives in the home.

• 4:35Speaker 00

  It will help control smart home appliances, play media, answer questions, respond to messages, and tap into the range of capabilities offered by OpenAI's ChatGPT." Ben, what do you think of that specific idea as an initial foray into the hardware market for OpenAI?

• 4:54Speaker 01

  Well, I don't know, you wanted to put this number one. You said you were excited about it. So I want you to go first before, before I give my reaction.

• 5:02Speaker 00

  I'm excited because I'm excited about all of OpenAI's hardware. I feel like we've been in sort of a sunken place in the hardware space for the last like five to 10 years. There hasn't been much new. And if I'm being a hundred percent honest, my experience with the Vision Pro, which was a product I was deeply skeptical of when it hit the market and I have come to love, has just made me excited to try something new. And so I like, I like this idea because it's gonna ship. And they're actually moving forward with the hardware dreams, which may ultimately be crazy, but also maybe more useful than the description makes it sound as I read that story in Bloomberg. So I'm just excited that this is apparently going to be real sometime in the near future.

• 5:47Speaker 01

  Well, yeah, I'll tell you what I'm excited about. So there's a bit about OpenAI, or not OpenAI, AI in general, that makes me feel like a kid in the eighties or nineties. I mean, just the, the bit about messing around and playing with stuff and like, I could imagine like my seventeenth year, like I was talking to someone, I know lots of people, probably lots of people listening to this, who sort of first got online in like the 1990s and were like, oh, I know what I should do. I should start a small business helping small companies get websites online. I could build websites, I could make a bunch of money doing this. I'm like, in the industry interviews, that's been like, it's come up with at least like three or four people.

• 6:25Speaker 00

  Yeah.

• 6:26Speaker 01

  I feel like right now, I want to go build AI apps for people. Like I could go out and solve your problems and software is amazing. You could do all these sorts of things. Like it's just this idea, this excitement and like, what's the best way to configure your setup? And to do all these sorts of things. All of this, like, it's so refreshing. Like, like, and I think that sort of speaks to your point a bit, just like stuff that's fun again. Well, there's one other thing from the eighties and nineties that this news reminded me of.

• 6:51Speaker 00

  Oh, boy, what's that?

• 6:53Speaker 01

  The boombox. Back in the day, you used to carry around the boombox. You had your vague sort of D batteries or whatever, filling it up that would last for like four hours. You would carry it around, not just to listen to music, but also when your new favorite song came on the radio, if it run over and hit record for your mixtape, just like.

• 7:12Speaker 00

  Oh, my God. This, this is like just five years before my time. I kind of missed the boombox era.

• 7:20Speaker 01

  Oh, you missed out because this is before, so the, the initial wave, like MP3s and all this, I've talked about this before, you would like, people would, there'd be directories of FTP servers where people would list their address and they'd have a list of all the songs they had. You would just copy this IP address. You would go to someone's computer and download songs off of their computer. Absolutely insane. This is the world we lived in before, like with the internet was awesome and you definitely worry about security. That's why we had to worry about security a lot very quickly. This is how people lived. This was even before Nap, the Napster comes along, makes it easier, all these things. So this is the world, but before then, how did you get songs that you liked?

• 8:02Speaker 01

  So yes, you literally would carry a boombox around with a tape in there. When a song came on you liked, you would run, hit record. And then you'd have like, you know, you got, and every time they had a new tape format that was like extended, you could have like a 90 minute tape instead of a 60 minute one. And you would have like the voiceover of the DJ over the beginning of the song, which you were missing like 15 seconds of, because you're running the boombox. I can't believe you never experienced this. Of course, you had the tape player in your car, that's what it was for.

• 8:29Speaker 00

  That's right.

• 8:30Speaker 01

  This is the first thing I thought of. This idea, you're carrying around this device that's battery powered and it's sort of with you. And I also kind of love it. I, I like, and I love it. And I think any long time readers of industry are probably going to know where I'm going with this.

• 8:48Speaker 00

  Okay.

• 8:49Speaker 01

  Which is the original Amazon Echo and OEXO. I, that came out like three or four months after the Fire Phone came out.

• 9:00Speaker 00

  Mm hmm.

• 9:00Speaker 01

  The Fire Phone is arguably the single worst product I've ever used in my life.

• 9:07Speaker 01

  It was so bad. It like it just, it wasn't just that it was misguided from a strategic perspective. It was horrible to use. Like everything about it was bad. It was one of the worst products ever.

• 9:21Speaker 00

  So this was before my time. What were they even trying to do with the Fire Phone?

• 9:25Speaker 01

  I was just trying to remember. They were trying to, they had like some weird new input methods. I can't even, I don't want to talk, I can't even remember it. It's mostly wiped from my memory.

• 9:34Speaker 00

  It was just awful.

• 9:36Speaker 01

  Yeah. But it was so bad. Of course they didn't sell any. So the reviews were terrible. They didn't sell any, didn't make any strategic sense for Amazon to be making a phone. And so then like three months later, they come out with the, with the Echo and Alexa, which everyone sort of primed, no pun intended, by the Fire Phone is ready to reject and say, this is a terrible idea. And I'm proud to say, I'm like, actually, this is pretty great. This is everything. It makes so much more sense in a way the Fire Phone didn't. And one of the ways in which it made sense is there is one environment in everyone's life where number one, you don't necessarily have your phone with you because it's charging.

• 10:20Speaker 01

  Number two, you're not going to feel weird talking to it because no one's around. That is the home. I think this idea of something to talk to and interact with in the home makes sense. It's made sense like, it's continually made sense with products that frankly sucked. Right? Like you, you, you use like an old school Alexa now in a world of L L Ms. And it's actually incredible they sold as many as they did, given how crappy it is. By the way, I had a killer Alexa use case this week.

• 10:54Speaker 00

  What's that?

• 10:54Speaker 01

  I was getting my, I was getting my haircut. I just go to like, you know, the local, like great clips or whatever, which is by the way, love technology. What you do, you can sign in on the app. You put yourself on the waiting list. You get a note, like it's literally like across the street. You get a notification when you need to run over there. You go over, walk in, sit down, get your haircut out in 15 minutes. Amazing.

• 11:12Speaker 00

  There you go. No more need for magazines in the waiting room. Just put yourself on the waiting list.

• 11:18Speaker 01

  Call and make an appointment and all these sorts of things. No, I need a haircut. I just go in the app, hit a button. Love it.

• 11:24Speaker 00

  Great.

• 11:24Speaker 01

  Anyhow, I'm in the chair and you know, she's cutting my hair and she's like, Alexa, skip this song. And she's like, play the other hairdresser about like, I, we've heard that song like 57 times. And I was sitting there thinking, that is one of the best Alexa use cases I've ever seen. Her hands are busy cutting my hair. She's, I, the poor people in a hairdresser's, in a salon, listening to the same songs over and over and over again.

• 11:48Speaker 00

  Yeah.

• 11:49Speaker 01

  Yells at Alexa, skips the song, goes to the new one. Great. Loved it. Great, great, great use case. Anyhow, this idea of talking in your home, I think makes a lot of sense. And I, the, what you get with a speaker is you get really good microphones and you get a good speaker. But what's interesting is for all these devices, the number one use case for Alexa, for Google Home, for, for these has ended up being music, like the hairdresser.

• 12:18Speaker 00

  And that's what I was going to say, like the hairdresser that you're describing, that's certainly how my family has used Alexa and my kids love, or my son at least, the three-year-old son loves using Alexa because he can talk to it.

• 12:31Speaker 01

  I'm going to start giving him tips on songs.

• 12:33Speaker 00

  It's actually fairly annoying. So look, if that's the baseline, then it is useful. But I'm kind of curious to see what they build on top of that as well.

• 12:43Speaker 01

  So I think it was, I think Stephen Sinofsky had a tweet that I thought was really insightful. The most important component for most people and the way these, these products were actually experienced was the speaker. The most important component for this device is going to be the microphones. It's, it's, because it's a device that is meant to be interacted with. It's meant, it's something that listens to you. And that sounds weird and creepy, right? Your speaker listening to you. But in this case, everything's weird and creepy until it's so awesome and great that you realize, uh, how can I live without this, right?

• 13:18Speaker 00

  Like this is where I go to the Vision Pro experience. It's like, why would I ever do that? Now I do that five nights a week. And so let's see what it turns into here.

• 13:26Speaker 01

  Right. So I like the idea of starting here. It's like a phone is too much. It's too aggressive. This is something, and I also like the idea of porting it around. It's sort of there when you want it and it's not there when you don't want it. And I, like the ideal future is you could just talk to your house. Um, by the way, which is coming for the home inventory app. Um, the, I have some of the components in place.

• 13:49Speaker 00

  Hands on top of it. Don't worry, everybody.

• 13:53Speaker 01

  So the, but this idea that, yo, you could just, this sort of ambient sort of bit, you can sort of like fake it till you make it as far as an ambient AI. If you just carry the AI around with you, like I, I just think it makes a ton, like, it just makes a lot of sense in a way that, I was just talking to Gruber about this and we were debating, is this similar to a HomePod or not? To me, the fact it doesn't plug in, that it's battery powered is actually the most essential feature. It's there when you want it because you, you could bring it with you. It's there when you want it. It's not there when you don't. It's not, it, it, it's, it's, I just think it makes all kinds of sense to start. It's possible it doesn't work and that's fine.

• 14:38Speaker 01

  And you haven't gone all the way down the road of like trying to build a phone and get an ecosystem and all those sorts of things. I think it's a great sort of V1 sort of project to start with. Uh, and I'm excited about it.

• 14:49Speaker 00

  Yeah. I mean, it is interesting. I missed the note on it being battery powered and not plugged into the wall. That makes me more excited as well because I was looking at all this.

• 14:59Speaker 01

  That's the whole thing that made me think of a boombox is the fact that you can carry it around. That's, that's critical.

• 15:04Speaker 00

  Well, and then I was thinking about it. I was like, well, if this is really useful and something I enjoy using, am I going to have to just buy like five versions of this for different rooms throughout my house? But no, you could pick it up and carry it with you as you go.

• 15:18Speaker 01

  And this gives a, this gives a signal if you like, people want a phone. If, if suddenly it's realizing people are taking this with them everywhere. They're bringing it in their car, like, they're like, you get a real sort of useful signal from usage of if there's something there, if there's something that people are interested in. I think the battery powered component is critical. It's a critical distinction from the Alexa devices of the world, from the HomePods of the world. And again, it's, it, it only would work in your house. But yeah, I think it makes a lot of sense. I'm excited about it.

• 15:51Speaker 00

  Let's see what it turns into. So as far as the hardware business generally, we got this question from Fister Frank. So what does a successful hardware product look like for OpenAI? For example, how important is it to sell X billions in product over the next five years versus establishing OpenAI as a product OS versus use this as another data gathering venture? Any thoughts on that? Like, how are you thinking about what this should be and what the goals should be for OpenAI over the next couple of years?

• 16:22Speaker 01

  It's a really, it's a really good question. Like building a hardware business is really hard. Yeah. Like just like, where are they going to sell these? Actually, that's another thing I like about this product a lot, by the way, is it's the sort of product, it's to be a great present.

• 16:37Speaker 00

  Oh, yeah.

• 16:38Speaker 01

  Right? Like it, it's, it's easy. There's something about that's easy in a way that a phone and getting cellular service and all those sorts of things. No, you're going to bring it home, you're connected to your wifi and it's just, it's going to like, you're going to be signing with OpenAI. All this will be done with your phone and it's just going to work.

• 16:54Speaker 00

  And it's the sort of thing that you won't necessarily want to buy for yourself. But if someone buys it for you, you will be psyched to just play with it. That's why it's a fantastic present. That's a great call.

• 17:04Speaker 01

  I mean, the problem with the phone is the, it's, you're making a bid to replace the phone, right? No one carries two phones. This is a sort of an add-on device. Now that said, that this is a great device in the context of doing hardware. Should they even be doing hardware at all? If they do hardware, what should the business model be? And this, you go back to my critique of Meta, right? Like you're a service that should be serving everyone. Hardware is fundamentally constraining your market because you're not going to sell hardware to everyone. So what are we doing here? You should like, you should hope someone else makes the hardware and you could be a service sitting on top of it. Doesn't that apply to OpenAI? And yeah, um, you can make that argument.

• 17:48Speaker 01

  Like, like has this whole effort been worth it just from the context of pissing off Apple? Right? Like this actually ties into, one of the concerns I've had about this hardware effort even before this lawsuit was filed is wouldn't it be better to be AI on all Apple devices? Instead of trying to like replace the iPhone.

• 18:10Speaker 00

  Presenting a competitive threat that they're going to keep at arm's length at best. Obviously they're currently in litigation, but like you should be partnering with that on the software side as much as you possibly can.

• 18:22Speaker 01

  And I think the pushback there is a couple of things is that number one, if you truly believe that AI presents the opportunity for a new paradigm. Apple's not going to deliver that paradigm. In fact, they're going to be an obstacle in delivering that paradigm. So there's, there's a degree of conviction and belief that Apple's not going to do this. Like, like flip side, or the implication of that is there's an opportunity to do this because everyone in the market is not going to get that. And maybe the partnership with Apple was a spur in this regard in realizing, look, Apple's, it's great we had this partnership with Apple. We're only ever stuck behind Siri and like people purposely in focus.

• 19:05Speaker 01

  If Apple gave any indication or signal that they would let us be the AI on their devices, of course we wouldn't build our own devices because that is obviously the best opportunity. If there was an opportunity, the iPhone to say, replace Siri with OpenAI, that's the best.

• 19:23Speaker 00

  We can live there. Sure.

• 19:24Speaker 01

  That's not going to happen. The fact that's not going to happen means Apple is going to double down and bet on themselves. That also means there's an opportunity. Now there's also the anthropic angle, which is we're not going to win the whole market anyway. So, but then there's a, you know, that makes it a number three business model. Like it's still, you know, how are these companies ultimately going to monetize? And I've been making the case for a while that the economic imperative for anthropic and for OpenAI is to own the consumer touchpoints. This is why at the end of the day, they are going to go after software. That's why they are going to go after Microsoft. That's why they're going after this.

• 20:07Speaker 01

  And in that context, that's why they're going to go after Apple. To the extent models are commoditized is the extent to which your model needs to be integrated with the end user experience such that they can't sub it out even if they wanted to. And this is a tension under, this is the story in tech. This is why Satya Nadella is writing essays every week about the importance of not giving your data away to these other companies. There is a brewing fight for consumer touchpoints and these companies are coming for it. And in that sense, this makes sense. Now, do you price it at cost? So you get people on your service? Do you price it at a premium so you can actually make some money and try to be the next Apple?

• 20:51Speaker 01

  I go back and forth on that. I think you could probably start by pricing at a premium to see if you have a market and play it out over time. But, um, that is a critical, you know, are we trying to be Apple? Are we trying to be Google is going to be a, a, an important question.

• 21:07Speaker 00

  Right. And how do you take any sort of market share initially if you're charging a premium for a service that people?

• 21:13Speaker 01

  Well, because the initial cohort of people buying this is not going to care about price.

• 21:16Speaker 00

  Just nerds like you and I.

• 21:19Speaker 01

  You and me and everyone in tech, you know, however many they can manage to, to, to sell in the first year. I mean, this is all within reason, right? I, I'm assuming this is going to cost a few hundred dollars as opposed to a few thousand dollars like the Vision Pro. But, uh, I mean, the technology, I don't think sounds too complicated. It's really, it's mics and speakers, right?

• 21:40Speaker 00

  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 sharp tech.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 Certechery and the Certechery Plus bundle. Check it out. And if you've got feedback, please email us at email at sharp tech.fm.