On this episode of The Six Five Webcast hosts Patrick Moorhead and Daniel Newman discuss the tech news stories that made headlines this week. The six handpicked topics for this week are:
- Zoom’s Zoomtopia 2021 Event
- Poly Launches New Hybrid/Room Solution at Zoomtopia
- Cisco Investor and Tech Industry Analyst Conferences
- Oracle Earnings and Cloud Breakout
- The Recent Apple Event
- mmWave and Apple?
For a deeper diver into each topic, please click on the links above. Be sure to subscribe to The Six Five Webcast so you never miss an episode.
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Disclaimer: The Six Five Webcast is for information and entertainment purposes only. Over the course of this webcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we do not ask that you treat us as such.
Daniel Newman: Hey everybody. Welcome back to another edition of The Six Five Podcast. I’m Daniel Newman host today. Principal analyst, founding partner at Future Research joined by my always esteemed better hair-lined podcast partner in crime, Mr. Patrick Moorhead. Pat, it’s Friday. It’s our thing. And by the way, kudos to us for consistency.
I’m not saying forever we will be able to do this Friday morning thing, but we put it on our calendar and we’ve worked it out. It’s been a lot less chaotic when we just know, hey, Friday 9:00 AM Central Time. We’re going to like these views.
Patrick Moorhead: Daniel’s great to see you and literally it’s the best part of the week for me. And we have to save it for Friday morning. And by the way, regarding the hair, I just know how to do the comb-over. I mean, I actually don’t have a whole lot of hair. It’s just for one thing that I just roll right over.
Daniel Newman: It’s a little better than mine. So I bet you don’t get that prop often. So I wanted to give it to you because there’s no better way to start the week or end the week than maybe getting a little compliment that you don’t typically get every single day. Hey, so for everybody out there, The Six Five podcast, we are about analysis.
So we try to look at everything that went on in the week in tech. And we look for six stories that are covered in the news. And we try to provide a little more color, a little more analysis, go a little bit more deep than what the news does. So think of it that way. Think of an 80/20, 80% analysis, 20% news.
Also the whole six five concept, six topics, five minutes each, but we tend to go longer than that. So if you’re tuning in with us live, just bear with it. We promise you the extra time is always filled with extra good analysis. So quick disclaimer, this show is for information and entertainment purposes only.
While we will be talking to and about publicly traded companies, earnings, investor days, and so much more, do not take anything we say here on The Six Five Podcast as investor advice. So we’ve got a great show though. We’re going to talk about Zoom, Cisco, Oracle, Poly. And we’re going to do a double dive on Apple, because it’s not just about Apple, but of course they have their big event this week.
But there’s also some spill out on whether or not Apple is still innovating. And by the way, this feels like a bit of a broken record topic, but it deserves to be covered because people continue to call the company the most innovative company on the planet. I disagree.
I don’t know what you think Pat, but we’ll talk about that later. So hey, you ready to get started? I think the first two topics I’m going to let you run the show or at least the first one, you start out. Let’s talk about a big two days Zoomtopia event. Patrick Morehead, it’s your mic.
Patrick Moorhead: Thanks Daniel. As a reminder Daniel and I go back and forth and we both based on our personalities would like to lead on all of these, but sometimes I lead, Daniel lags. Sometimes Daniel leads, Pat lags. But we keep it fair like that because we wouldn’t want one of us to have 95% of the airtime and that’s-
Daniel Newman: Or would you?
Patrick Moorhead: I don’t know. Well, that’s why we have our own individual podcast Daniel, so we can just listen to ourselves and only ourselves talk. So let’s move to Zoomtopia. So Zoomtopia is Zoom’s annual event for end customers, for channel partners and industry analysts and press, analysts like us because we’re not the press.
Although sometimes we get confused with the press. You can read our analysis, both our analysis on everything that was announced, but Daniel, what I wanted to talk about were some of the bigger picture items. So first and foremost, and it’s weird, sometimes I do my best thinking in the shower or sometimes in the bathroom, sometimes walking town lake here in Austin.
But my biggest takeaway is full stack. Zoom is all in on a full stack collaboration solution and early on before Zoom was the rockstar that it is right now, there are a lot of questions on, is video a product or is video a feature of a bigger product, right? We saw Microsoft with Teams. We saw Google with Workspaces and Meet where it’s really a feature, right?
That’s integrated into a suite. And if you buy into this, then fundamentally you had to ask, what was Zoom going to do next? Were they going to be an API provider for video? Well the answer is no, and they’re going full stack.
So obviously they had their video capabilities, but they leaned into chat more than I’ve ever seen the company lean into chat in terms of its capabilities, in terms of its fluid representation and moving experience in and out to create enterprise value. And Daniel, I can’t help but to think this might’ve had a little bit to do with Salesforce buying Slack and then doing a strategic deal with Amazon, with Chime to deliver video.
So, that’s one. Evidence part two is Whiteboard. So instead of having partners for Whiteboard, Zoom is creating its own Whiteboard. Those are a big deal. So Zoom is essentially going to go head to head with Google and Microsoft. The one thing we haven’t seen Zoom’s answer to yet is a productivity suite. And maybe we can discuss whether they need a productivity suite like Google and Microsoft has to compete.
And I almost laugh and throw up in my mouth a little when I say this, but even Salesforce has it with Quip. So, that’s the one big thing they’re missing. Aside from that, I was a little confused at first, but Zoom came out with a video call center which they don’t call a call center because they’re in the midst of acquiring Five9.
But this is really you see what I see. Think of a doctor’s appointments and a doctor’s visit that you go into where you actually have to see them. It’s simple, it’s not complex. You need to see what they see and seems to make a lot of sense, and really doesn’t seem to overlap with Five9 at all. And Five9 is doing a ton.
We had a CEO role in Trollope for Six Five insider, but they’re making audio sexy with automation and AI. So it is different, and the final thing after, Dan, I’ve sucked all the oxygen out of this room, on this topic is conferences. Zoom actually held their conference, Zoomtopia on their own product events/conferences, which I thought was pretty cool.
You’re going to have different tracks. There’s about 10 pretty high value features in there. And I think we should check it out, potentially use it for the Six Five summit. We’ll compare it to some other solutions, let’s say from from Cisco that offer similar types of products. So anyways, full-stack provider, that’s my biggest takeaway.
Daniel Newman: There’s a lot there and you did cover a lot. So I won’t take a lot of time, though a couple of things that caught my eye. One, the unified messaging product. I shared it out on social. I did have a few people come back and ask, is that Slack? But one thing I think that Zoom does understand is the mix of synchronous and asynchronous communication.
It became very evident. And I think platform, we’ve entered the era of the platform. Platforms are sticky. And so when you asked that question about productivity, I think platform is going to be the way Zoom is going to answer those questions, is well, we don’t have it, but we have a platform that’s extensible. And our platform will attach.
So you want our full stack, video and communications and chat solution, but you are a Office 365 user, we’ll make that possible. Of course, Microsoft is going to say, use us top to bottom, left to right, across the board. But we do know Zoom has hundreds of thousands of paying customers, large paying customers, and they continue to add to that every quarter.
So those customers need a solution to incorporate productivity. And then of course, as we look at what the Microsoft, what Salesforce is doing with these kinds of fully vertically integrated productivity, and then business application suites, the platform, yet again can become the answer. You want to make it extensible.
You make it extensible to connect to a Salesforce service cloud or a sales cloud, or a SAP ERP system. And you are able to extract the data that you need through the platform. Does that mean that Zoom doesn’t need to, or won’t have to figure out a way to tell this story and make it convincing? No, they’re going to be accountable to do that.
But just like Cisco and WebEx, and we’ll talk more about Cisco later, but just like that. Deep down as I see it, they will have a way to address it. The platform will be the narrative, and then you’ll see more inorganic acquisitions continue to come especially as Zoom sits on more and more cash through its massive growth and profitability.
So overall good events. And of course, Pat, me liking to talk investor stuff. They did actually host an investor event right in the middle of Zoomtopia. So we did get to hear from CFO. Kelly Steckelberg did a great job presenting that, but we talked a lot about those numbers and earnings after earnings last week.
So we won’t shed another tear for what happened or what will. We appreciate. Zoom. Zoomtopia, good event. Thanks all. Let’s just back that up, Pat, with a little more Zoom, but not really Zoom and talk about the rooms, Poly, another company. You kind of mentioned Zoom is doing their own Whiteboard.
Zoom is doing… But also Zoom has built this kind of ecosystem with Neat, just made a big investment in the company. Poly, building lots of hardware, and we are going back albeit how slowly it is and painful from physical and not physical events.
We are going back. Some point we’ll be back in physical event. We’ll be back in our offices, Pat. And Poly is embracing this and building new solutions, which we’re now discussing in Zoomtopia.
Patrick Moorhead: A little backing up. So Poly, there’s essentially two different equipment strategies that are out there in the marketplace for rooms. One is a hardware that works with multiple kinds of services. Whether it’s Google Meet, Teams, WebEx, Zoom, things like that. And there’s PC-based solutions from folks like Dell and HP that allow you based on the call to shift between that.
And then you have, it’s funny I can’t even say the Cisco WebEx approach, which is fully unified and can’t talk to anybody else because they just announced interoperability with Google Meet. Poly is different in that, first of all, it’s Android based, but you can boot into different operating environments, specifically like Teams and also Zoom.
You can’t do it on the fly yet, but I just call that out that Poly does have a very differentiated way of doing things. So they announced… Well, it’s funny, their press release said they announced two new devices. They actually announced one new device and then they got the other device certified for Zoom.
And it’s the e70 and the x70. Check these things out, they’re super space age. So imagine you walk into a room and these devices have two cameras, multiple microphones, two 4K cameras, and the x70, which the larger unit has a big speaker. So the e70 is more for a smaller room or a bigger room where you have external speakers.
And the key here, the thing that I think is so cool here is they help enable a Zoom feature like gallery. So going back to work in hybrid is tough. One of the positives of everybody being remote is that there was equity, right? You had one person, regardless if you were VP or the junior wood chopper, you got the same size square.
Maybe a little different for teams that has big squares, little squares and stuff like that. But one square one person, and nobody was sucking up to the VP who was in the room that got the advantage of the person who was remote. So how do you equalize this stuff now? Well, what you have to do is if you’re in the room, you have to slice up those videos of people.
So let’s say you have four people in a room, x70 and the e70 will actually separate each person, which if you’re remote, you get your own square. You don’t get one square with four people in it that you can’t even see what they’re talking about. You can’t even see what they’re doing. Big differentiator.
And Daniel, you and I visited the offices under an NDA trip here in Austin to actually look at the x70, and we also saw it in action. And I don’t think we’re ending here, Daniel. I can absolutely envision rooms of the future future not having one of these devices in it, but multiple devices.
Because the challenge is if you have 27 people in this conference room, you’re going to need a lot of cameras with a lot of capability, with a lot of AI to be able to go back and forth, zoom in on the person talking, move over. If two people are talking get a view of those two people talking, and then if you’re remote, you get the view that everybody is in their own square.
So I think this could be the hidden boon for this industry, right? Because we’re kind of taught to think one device, one room. How about five devices per room? Anyways, I’ll leave the rest for you.
Daniel Newman: Thanks for barely covering that and giving me a lot of things to speak about. Pat, I want to talk about equity because equity is important. And what the future is going to be all about is making sure that everybody that participates in a meeting is not discriminated against for their location.
We are going to be in a world where we’ve already identified future of work means hiring the best talent regardless of their location. That means we’re going to be embracing video in a bigger, more significant way. We’ve also entered a world where we know offices can shut down for extended periods of time and people will have to work in different places.
We also though know that people are productive when we get into rooms together and in the future, companies will bring people back together. This year has been an anomaly. This is not the norm, no matter how much people want it to be. In some cases it does make for great TV.
When you get people in a mix of conference rooms, board rooms, individual rooms, offices, Starbucks, coffee shops, driving in their vehicles, how do we make sure that everybody that’s participating in the meeting is on equal footing? And I think that’s really what this hardware story is all about. Building hardware that if you’re in your car driving, great audio quality. You’re connected.
It’s not, can you hear me? Can you hear me? We need that kind of quality. That’s going to be a combination of things like great headsets, connectivity. And then you’ve got all the way up to products like these, Pat, with the x70 and e70, where it’s like, hey, we are in a room together, but actually we shouldn’t be less important or focused on than the person who’s by themselves with a single camera shot on them.
And that’s really what Poly is looking at using its AI algorithms technologies to make sure that the audio is as clean for each individual in the room, that video can focus in on an individual person. And by the way, the experience for all people that aren’t in the room needs to be not so choppy. All of the motion technologies of the past were very jerky.
You’d get nauseous and in a room with a lot of different people, meaning if you were trying to follow a meeting, it didn’t work out. So Poly is one of the companies I certainly believe is at the forefront of trying to solve this problem, trying to solve what work will look like when we do in fact come back to a more normal state, but we have to start addressing that now.
We can’t wait till it’s normal again, until we’re all back in the office again, because we don’t really know when that’ll be. And once we’re there, that solution already needs to be in place. Pat, we’ve spent a lot of time on this one. It’s good stuff. Time to move on to the next one. You want to talk about Cisco investor day?
Patrick Moorhead: Let’s do it.
Daniel Newman: Yeah, so this week Cisco had an investor day and an analyst summit. Pat, you and I attended, spent many hours in various meetings and had a lot of access. So it was really great. Chuck Robbins, CEO, Scott Harrell, the CFO. We had listened to Tony, the head of strategy and they were very engaged and answering our questions, but let’s talk about what, at least my takeaways were for the company.
So we have a very large, one of the world’s most trusted technology company leaders. We’ve heard no one ever got fired for buying Cisco. You can replace that with a few other names, but that is one of the old outages. Chuck basically at a very high level, kicked off wanting to people to kind of reminder to the world because we like to talk about Amazon and Microsoft.
We like to talk about the big chip company. Sometimes some of these big stable enterprise B2B technology companies have become a little bit undercover, is what I would say, in the press, in the media, Cisco deserves a little more attention. He pointed out it’s an ecosystem of more than a million customers and partners, Pat. 98% of the Fortune 500, company is in an innovator. They have 25,000 patents and they spend $6.5 billion a year on R&D.
And Pat, we talk a lot about that. R and/or D, best place in the world of work. But what the whole theme of this event was really about in my opinion, was Cisco trying to convince the investor community and then later the analyst and the industry analyst community, that they are ready and prepared to make a pivot away from big iron halfbacks, perpetual licensing models and maintenance agreements to a subscription-based, everything in the portfolio as a service.
Now I’m going to give you two sides. One, absolutely necessary, as our friend John Ford would say. On the other hand, Cisco is doing pretty much exactly what every other company in their situation are doing. We heard Antonio Neri in 2019, pretty much make this proclamation albeit smaller companies, smaller portfolio, easier maybe to make that move than would be for Cisco.
Lenovo is in this transformation right now, Pat. We’ve heard Michael Dell and Jeff Clark talk about this transformation. So it’s not necessarily unique, but whether it’s unique or not, convincing the market that they’re able to do this and they’re going to be successful was one of the big outcomes of this investor day.
So he focused on growth of software revenue, growth of subscription revenue, growth of services revenue. How quickly is the company transforming to software? We’re seeing over about a six year period of time that companies improve its subscription revenues by about 23%, is how much it’s moved for that category.
We’re seeing how much are they innovating? What were they doing in 2017 versus 2021? And this was the kind of stuff that Chuck really focused on. And then of course, really trying to make sure that the market understood that they are attached to cloud growth. So while we think of AWS, we think of Azure, we think of Oracle cloud. We can talk about that in a minute.
We think of Google. People haven’t necessarily figured out how to think about Cisco when they think about cloud. You obviously have the scale out scale up part of their optical, of their internet, of the future technologies that come from that side of the business. So people don’t realize that Cisco’s in the chip space.
Cisco has a business there and they are outfitting connectivity for a number of cloud scale players. On the other side, you’ve got their data center network and infrastructure. Well, all this hybrid cloud needs the on-prem and it needs to be super fast and connected. Cisco has the Edge.
So all the hardware, all the connectivity, whether that’s Edge branch campus, or Edge servers and connectivity, for things like smart cities and connected devices and retail, the company is playing in that space too. So I think we could cover a lot of ground and I do in fairness, want to give you some room, but what I really felt here, CEO Chuck Robbins leaned into the fact that the company is prepared to make this transformation.
They’re still very focused on security. They’re still very focused on building the highest quality hardware. They’re focused on helping to deliver technologies that cloud scale companies can embrace, but they’re also focused on moving to consumption. They’re focused on subscription growth. They’re focused on being more as a service, being valued more as a software company.
And I think as a whole, that came very clear. They will be competing with everyone else to do this exact same thing. And I think the commitment that they’re making will be validated through their growth, which they’re targeting at five to 7%.
Hard to necessarily get super excited about that, but if they can make this transformation move to that kind of revenue and continue growing in a five to 7% rate while doing that, I think the market will be fairly satiated. Because growth while moving to consumption is sometimes, as we’ve seen Pat, very hard to come by.
Patrick Moorhead: Yeah. So Daniel, that was great analysis. One thing I want to flash up, and this was my favorite slide from the entire day because it pretty clearly shows to me that falling out of bed and not stretching a bit, we’re looking at a $400 billion TAM for Cisco. But essentially, part of this the talk track is how do they monetize the public cloud?
And that was key for me. I mean, listen, I’m certainly not a hybrid cloud denier. 10 years ago, my analyst firm cited it as the most important growing thing. I got into OpenStack, which ended up being a disaster. But with Kubernetes and things like that, it’s a whole different thing. So Cisco’s cloud capability is hybrid, but it’s also public.
Like you said with Silicon One chips and that’s in that internet of the future. But what some people don’t realize is that for cloud expansion, you need internet expansion. And with internet expansion, you need Cisco equipment. So that’s one. The other thing Cisco doesn’t get enough credit for is that it has what is called full stack observability.
So today’s applications, whether it’s a smartphone app have multiple APIs, multiple levels, potentially data being in multiple places. And you have to know exactly what’s going on in every step of that. And by the way, most of that capability is in the public cloud. You need a service to tell you what’s going on.
So if something breaks, you can go fix it. And my gosh, if you’re a financial institution, you actually get ranked and rated and can be fined if your performance and availability isn’t at a certain level. And that’s where things like AppDynamics and ThousandEyes can come in and help. Security as well, right? Security is end-to-end, it’s private cloud.
It’s hybrid cloud. So that was my biggest learning of the day. And while I’ll admit, I don’t completely understand the 900 billion which is adjacent. I like to focus on this one because the $400 billion to me is one that is easy to understand. It’s funny, I’m wondering on this Daniel, future of work was already covered in the 400 billion here, right?
See hybrid work. I’m wondering, does this pretend to acquisitions maybe, or them getting into something that is beyond something that they’re doing today?
Daniel Newman: It was a little unclear. This will be something that will be great in our conversation that I’m sure we’ll get with either with Scott or Chuck or Liz in the near future. I’d love to ask that question. In fact, now that you’re asking that question, I wish I’d asked that question.
I think what they’re really kind of saying, and this is something I keep saying is that we like to talk about the competition for market share as if markets are flat, but markets are growing. And so obviously we are addressing the fact that, this goes back to what we talked about with Zoom and Poly, Pat, just like the way work is shifting.
Whether that’s NLP technologies that enable people to communicate across different languages within an application concurrently. There’s all kinds of different adjacent technologies required to make that happen. I don’t know exactly what Cisco’s plan is to participate in that, but we know WebEx, for instance, opens a lot of doors.
Maybe they’re going to launch a productivity suite. I mean, who knows? But we’ve got to keep moving here, Pat. Good topic, we’ll come back to that one everybody. It was great to actually have that much time to hear of Cisco’s plan to move forward. Speaking of companies moving forward, I came out with a bold MarketWatch piece.
We’ll put it in the show notes, but that investors shouldn’t overlook Oracle right now. And that the company is in the midst of a bold comeback. Now, the company had its earnings this week. And it’s hard when a company grows 4% and misses its revenue target albeit by a few bucks, and beats earnings slightly to be like, oh, they’re making a bold comeback.
But I believe that despite the fact that the growth was only 4% on the whole top line, that some of the information that was revealed by Safra Catz and Larry Ellison in this quarter’s earnings, tells another story. Now Pat, what have you and I complained about the most over the last two or three years when we’ve talked about Oracle?
Patrick Moorhead: Yeah, it’s about cloud. I think we complained about it in different ways. You wanted IaaS, PaaS and SaaS broken out, but guess what? Nobody in the industry is doing that, right? But boy, it would make our lives… Even Amazon’s not doing it, even though I know Amazon takes pot shots at other people. It’s like, no, no, no, Amazon, you have IaaS, PaaS and SaaS and you don’t break it out, so.
Daniel Newman: No. So great point, but I think what we both complained about besides the fact that maybe I was asking for an unreasonable amount of individual reporting here is that we weren’t getting any reporting. We were getting growth numbers against nothing. We were like, oh, you’re growing NetFusion 38%.
Well, was it $1 and now you’re doing $1.38? Or was it a hundred million and now you’re doing 138 million? We didn’t know. And so this quarter, the company finally came out, bulleted headline in it that it had reached $2.5 billion In cloud sales. So that’s SaaS, PaaS, IaaS. That’s cloud at customer, the hybrid cloud solution where basically Oracle drops its cloud off in your data center.
But that’s out of about what? Eight billion. Sorry, about $10 billion run rate out of about $8 billion in total revenue, or eight, nine billion in revenue this entire quarter, Pat. That’s a big piece of the company’s business right now, very significant.
And I guess the real reason I’m saying they’re making bold comeback is three years ago, I jumped on MarketWatch and I wrote an article that essentially said, Oracle is a cloud pretender. And I think you would have agreed with me Pat, in the-
Patrick Moorhead: At that point they were
Daniel Newman: In the first generation, the genuine cloud it just wasn’t even close to offering a competitive solution to what Azure, AWS, IBM or Google, any of them had. But when someone gets it right, Pat, our responsibility as analysts is to turn around and say, you know what? Prove me wrong. I’m glad you did. So, Clay Magouyrk and the team at Oracle with their Gen 2 cloud, the autonomous database technologies.
And then of course the rapid growth of their SaaS products, NetSuite, and Fusion ERP, both growing by the way faster than core Salesforce products, just as a percentage basis. Not as big, but as a percentage in between Salesforce and Dynamics cloud products. Pretty impressive growth rate Pat, but a $10 billion run rate puts Oracle firmly in the spot right after Azure.
Now I know that’s going to hurt some people’s feelings over in Mountain View, but Gardener, and we don’t cite Gardener on this show Pat, because we run our own analyst firm, but Gardner does do the quadrants. They do do some benchmarking stuff we don’t do, but apparently in at least one report that analysis’s planning to put out, they actually have Oracle usurping Google as the number three cloud player.
So when I say a bold comeback, look, the whole future Oracle is the bet. Can the company make the transition to cloud? They have 400,000 customers. They have 74% of their revenue, I believe last time I checked is recurrent. Stable company, pays a nice dividend. Stock is up almost 40% on the year. It’s doing all the right things, but 4% growth is boring.
But when you’re growing high double and triple figures in cloud and your entire claim is that you will become a cloud company and you start to execute and you’re proving it in your results and you’re finally coming out with numbers, you’ve got to give kudos.
Oracle, it may be a company that nobody gets too excited about when you say the name, but maybe it’s time to get excited because they’re doing some really good things.
Patrick Moorhead: Daniel, you covered pretty much everything. So what I’m going to do is, I don’t know if it’s a victory lap or not, but I was pretty harsh on Oracle and cloud. I wrote a pretty nasty article about Larry and some of the stuff that he had said and some of the claims that he had made. And that was during Gen 1.
And I just thought the company was flailing in IaaS, which they were. Gen 2 comes along, bare metal. They hired a bunch of engineers from Amazon, including Clay. And by the way, that always doesn’t get you the results you want. IBM had hired a bunch of Amazon people and it didn’t end up the same here. But the fact is that Oracle Gen 2 cloud is competitive.
And I love the way that they’re using it as a weapon for their SaaS businesses. Because if you look at Salesforce, Salesforce has to share the profitability and SAP for that matter. They have to share the profitability with an IaaS provider.
And if you look at AWS is our bank which is about 30 points, and let’s say on a good day that they’re getting a 30% discount, right? You’re still looking at that’s 20 points that is being given to AWS that Salesforce and SAP could be taking had they made the investments in CapEx and had that capability.
So if nothing else, Oracle is really looking good on enterprise SaaS capabilities driven by a competitive cloud that is underneath it.
Daniel Newman: Yeah, that’s good analysis. And I’ve got to give you some credit and I think sometimes not a victory lap or we deserve this, but sometimes when it really does feel like there’s no oxygen left and we’ve taken it, you always find something to say. So hopefully everybody out there appreciates that.
Like I said, we do kick it back and forth and our instinct is to cover everything, but that was a good add there, Pat. We did a Callin Pod and we published it on the Apple event. So our last two segments here, we’re going to talk about Apple and the event. We’re going to talk about a little bit of individual piece of news as our last item, but we’ll put the show notes.
We’ll put the link to our pod because you get a little more in depth there, but this is our big show. This is the one that we have the huge audience for. So we wanted to make sure that we at least circled back here, Pat, talked about some of the key announcements at the Apple event. So I’ll let you take this one. And we’re doing the six, 20 today.
We’re going for the longest ever episode. So, we’ve got to keep it short, but let’s make sure everybody out there gets that link if you didn’t have a chance. Pat, what’d you think? Apple event, iPhone 13, watch, pod, pad, go.
Patrick Moorhead: So overall, I was unimpressed with the level of innovation that had come out. And I say that, and Daniel, you always reinforce this, that it doesn’t mean we don’t buy the products, that we don’t respect the stock, right? I mean, I carry two phones. I carry a Samsung, either fold or S20 plus for my real phone.
And then my iMessage phone is a mini. Why? Because my family won’t use anything other than iMessage. But low on the innovation curve, low on surprises and here’s what’s different, and this is not just me. I admire Apple for a lot of things, and one thing about their events, they’ll always come out with something different and unique to get you thinking about something and whether that’s a service or thought leadership or a product.
And I’m not talking about, and yet another thing, or just another thing at the very end of these things, or whatever Tim and Steve says. It’s about making you think a little bit differently. Oh my gosh, I just said that. And this event had none of that, even though we had new iPhones, new iPads and a new watch.
There was really nothing that was there. A couple of things that I was impressed by. First of all, the 815 bionic is just yet another iteration of Apple running up the score, at least on CPU performance. We’ll talk about 5G performance a little bit later, but well, we can talk about that now.
Apple phones have the slowest performance of any smartphones here in the US and part of that is because they have a DIY RF solution and the rest of the industry uses a Qualcomm RF solution. On iPads, nothing really to write home about. A new version, by the way, I got excited about the iPad mini.
It makes a great coffee table device to change channels on your TV and do some light snacking. Does that change anything in the education market? Does it push on PCs? Absolutely not. It’s still too expensive even compared with a Chromebook. Because let’s not forget, you have to add a keyboard to that iPad when you’re in education.
And what are you looking at? At 100, 200 bucks for the keyboard? So not affordable. Apple watch, I am an Apple watch user. Why? Because it happens to be the best watch currently for health. If Samsung can get blood pressure approved here in the United States, I’m going to go to Samsung. What did they do?
They made the display bigger in the series seven, added some interesting algorithms, but really nothing to get too excited about. Bigger display is better. It’s 20%, but I don’t think it’s going to motivate that many people. I want Apple to add a blood pressure sensor to this thing. And it’s like, you got me, take my money.
Does this matter in the big picture? I don’t think it matters in the US. Now I do believe, and I do know that Samsung is taking a little bit of share away from Apple with its flip and its fold, particularly with the flip. And we will see probably next quarter how much share Samsung actually took. Samsung’s biggest challenge is that it can’t supply the goods.
I mean, T-Mobile did their big promotion, not with Samsung like they normally do, but they did it with Apple with the iPhone 13. And basically threw a shot out at Samsung that they couldn’t supply enough phones. So maybe they didn’t take share because they just couldn’t meet that supply.
So net net, low innovation, I don’t think it matters in the US. I do think it matters outside the US where there’s not an iMessage lock-in. Just to give you a comparison, Apple has about 50% market share in the US and then the rest of the world, about 20% out there.
Daniel Newman: Yeah, 22% global. A lot of great points. Like I said, definitely check out our special episode on the Collins, but we did put it out on all of our big channels. So it’s out on Spotify, Apple. We did dig a little bit deeper into this. Pat, I was asleep by the second set of announcements.
It’s like I said, it’s iterative. It’s all fine. It’s fine. It’s good, it’s whatever. Sleeker bezel, okay. If you give me a magnifying glass, I might notice that. I love edge to edge comments on devices that clearly weren’t edge to edge. I don’t understand what defines edge to edge if there’s like a full centimeter of bezel around the outside of it.
The cinematography was cool. I do like that. As someone who’s now put a very expensive DSLR in my studio, I looked at that and I’m like, isn’t that exactly what I’m doing with my really expensive DSLR? But again, a really expensive DSLR. It’s still cheaper than a loaded up iPhone. So, you’ve got to make that decision as well.
Pat, I’m actually more excited about the services, the TV, the music as some of the things that are a part of their platform ecosystem that have been with the last several launches. So I don’t have much more to say. I’m bored. Apple, I’m bored and I expect you to entertain me. So, I feel like this is the moment, I’m in the arena, throwing the sword up to the office of Tim Cook, and I’m saying, I’m not entertained.
And so I’m not entertained, but you know what? To your credit, you will sell a ton. You will return to shareholders. You will do buybacks. You will make the market happy. And most people are pretty unaware of what innovation really does look like and what the cutting edge tech means. And sometimes it’s just because what is actually the best, fastest, and most capable isn’t necessary.
And I think Apple really constantly sort of straddles that fence of how necessary are some of these next generation technologies. And this actually takes us to our final topic, which I’d like to touch on here, which most people don’t know that 5G is not all created equal Pat. And you and I can actually go back a few years and remember 5GE or what was it?
Yeah, when AT&T got a lot of rife for this, but they had their whole enhanced 4G LTE, and they were calling it like the… Was it 5GE? Was that what they were calling it? I’m trying to remember that. And it was basically not real 5G. It was fake 5G.
But in the beginning it was something that phones, both iPhones and Samsung phones that were on AT&T’s network, people thought they were on 5G for a period of time when they were really just getting enhanced LTE. Then 5G came and every company sort of does this at their own pace.
Companies that are using mostly the Qualcomm components, Samsung, OPOs, Xiaomi’s, they’re all putting in the newest, like you said, 5G RF systems, and they’re embracing all the channels for millimeter wave. And they’re doing it on every device around the world to make sure that as these networks, as the service providers spin up these new networks, the phones are going to be as capable as possible to deliver the best experience.
And just for those out there, there’s kind of two bands. There’s millimeter wave and then there’s sub-6. Sub-6 5G is kind of this robust, reliable, mid low band 5G that basically is a lot like 4G LTE in terms of the speed, the dependability, reliability. In terms of your experience as a user, it’ll feel pretty similar.
But millimeter wave’s whole nother level. This is where you’re talking about getting gigs speeds up and down in places. It’s very specialized, it was built for 5G, and it’s a complete unique offering that’s associated with 5G.
And so on a worldwide basis, the question I have about this, Pat, is everybody thought with this second generation, the iPhone 13, which is now the second phone that Apple has offers 5G on a worldwide basis, the first generation, okay. Apple typically slow rolls everything. Remember when the first iPhone came out, it was on the Edge network.
Didn’t even use 3G, even though 3G was available. Now we’re all the way to five and millimeter wave is established. It’s been deployed on all these devices for a long time, Pat. We’re in a second launch. And this isn’t only a second one, but this is a super cycle. This is the 13. This isn’t the 12 plus pro max interim launch.
And yet again, for whatever reason, Apple decided on a global basis, it did not need to deliver millimeter wave. Meaning basically anybody that buys an international Apple iPhone 13 is still going to be essentially using the sub-6 version of 5G, which again, will feel a whole lot like the LTE experience that they’d had prior.
And so this is where you look at lagging innovation. It’s not that the company can’t do it because they have the relationship with Qualcomm. They have the internal silicone building that they’re doing. They could have developed the millimeter wave because they’re doing it in the US, Pat. They’re doing it in the US and people in the US already get this experience.
But they’re basically saying, we’re going to give you the lowest possible quality 5G experience on the globe to this 22% market share that we have. And here’s my bet Pat, is that they know that when they do another cycle in six months, they can make that change then, and they’ll sell a whole bunch, eight, nine figures more phones, and people will buy them.
And so this is the question I have for the market Pat, t’s not just about envision. It’s about how long does the market put up with the fact that Apple actually delays offering the most innovative solutions and products to its customers, because they know you will pay for two, three, four versions of actually the same product in order to get tiny iterative improvements?
And this is just one more example of Apple doing this. And on a global basis, as a guy who still uses an Apple, not going to lie about that, I do use a Samsung too, but it pisses me off.
Patrick Moorhead: So Daniel, I made this comment in our initial calling on this, and it’s really a half-life. If Apple continues to do things like this, then it starts to erode the brand. Apple’s smart, and they probably will come back next time with something that doesn’t piss people off. I think it’s a cost reduction effort, right?
That’s what this is. It’s, I’m going to save the money of the RF backend and the testing and all that stuff. And I know that my users, once a 5G millimeter wave is available in their backyard in a bigger way, they’ll have to go out and buy my new phone. So Apple knows where it can stomp on its users. It knows where it can’t.
And I don’t think it’s going to make much of a difference at all, but I think that we do need to call things out like that because I don’t think it’s right. But in the end, Apple is a dominant market player, has a monopolistic market share in the United States. And it’s just leveraging what it can do, because it can.
Daniel Newman: Absolutely. Well you think they’d do the opposite then. They’d give less in the US where they have dominance, and they’d give more globally to try to convince people. I can’t figure it out entirely Pat, but everything you mentioned is correct. Maybe it’s about margins. Maybe it’s about cycles and more sales, more revenues.
Greater returns to shareholders. But what it isn’t about is it isn’t about being the most innovative company on the planet. So let’s just stop putting those two things into a single thought. All right, we’ve got to wrap up here. The six nine, is got to call up for a day, but Pat been a lot of fun today. We covered Zoom. We covered Cisco, Oracle, Poly, and a whole bunch of Apple here.
Everybody out there, hit that subscribe button. We do love having you join us on Spotify, on Apple, join us on Google, and basically everywhere else that you can get podcasts or click us on YouTube. As Pat always likes to say, send all the negatives to him, and if you’ve got some positive feedback on the show, please feel free to send that my way. For now, we’ve got to say goodbye. See you later next time on The Six Five.