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do you have a device or an angle for
00:00:02
Apple to go after if they were truly
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ambitious or maybe they are and it's
00:00:06
just in stealth what do you think you
00:00:07
think it's the goggles the glasses you
00:00:09
think it's a pendant you think it's
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Optimus what do you think i don't think
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they have any chance of anything great
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love it i would take the exact opposite
00:00:16
of what Freebrook says look at this
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chart and I'll tell you why okay here we
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go this chart is not This chart is not a
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strategy so this is a chart of Apple's
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revenue and what you see is iPhone has
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completely stalled out and so to
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Thomas's point where do you make money
00:00:31
you make money in other hardware this is
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not a strategy of success this is a
00:00:36
strategy of inefficiency
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i lost my AirPods i need to buy a new
00:00:40
pair oh the cables changed i need to buy
00:00:42
a bunch of those this and that and a
00:00:45
this and that strategy is not a strategy
00:00:47
it's a tactical play for revenue
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optimization in the short term a company
00:00:51
that focuses on this kind of revenue
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growth is not capable of creating
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something that's exceptionally
00:00:58
unexpected that will come from a new
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company who has no ties to the past has
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nostalgia
00:01:05
on the fact that we're going to swap out
00:01:07
the connector type and you know book
00:01:09
another billion dollars the what Thomas
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said is an indictment actually about
00:01:13
their ability to do it when your AirPods
00:01:15
business is two or three times bigger
00:01:17
than Open AI what there is internally
00:01:20
when you try to have a strategy meeting
00:01:22
about what to do is derision about Open
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AI because you're like that's small and
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even our AirPods business is three times
00:01:30
big that's what some smartass MBA will
00:01:32
say in that meeting and it'll shut the
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meeting down
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so how do you expect that culture to
00:01:39
then all of a sudden get their act
00:01:40
together i think it's exceptionally hard
00:01:43
and here's the clip on Q play the clip
00:01:46
Nick it's a great point here's the clip
00:01:48
i'm Apple nostalgic me too bring Steve
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Jobs back watch this lunacy you probably
00:01:53
saw that Johnny IV has linked up with
00:01:55
Open AI to create some sort of future AI
00:01:57
device
00:01:59
yeah I don't know what that is i don't
00:02:00
either yeah is this a space that Apple's
00:02:02
looking at is this a space that goes
00:02:04
beyond what you have in the current
00:02:07
lineup of devices something that is more
00:02:09
personal maybe you wear it glasses
00:02:12
i I think I mean I think we have some
00:02:14
extremely personal wearable devices if
00:02:17
you want something that's uh aware of
00:02:19
your environment with with audio I think
00:02:21
you're you're wearing one right now on
00:02:24
on your wrist um if you want something
00:02:26
that you can capture the environment
00:02:28
with and see and also receive visual
00:02:30
content you might just have one in your
00:02:32
pocket right now um are there other form
00:02:35
factors that can make sense to AI uh
00:02:38
sure but uh pretty hard to beat
00:02:41
something that's uh with you all the
00:02:43
time and glancable or you know provides
00:02:45
a nice screen that you can interact with
00:02:48
um so uh yeah I I don't know what
00:02:50
they're working on what do you think
00:02:52
Jimoth again I think I want to be very
00:02:55
clear about what I'm saying that is a
00:02:56
very competent Craig Federi very very
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competent executive
00:03:02
and whoever the person beside him is
00:03:04
that guy's I'm going to assume competent
00:03:06
as well they're competent at making
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money
00:03:11
the way that they've made money for the
00:03:14
last 17 years with no meaningful
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disturbance
00:03:20
and I think it's just something to
00:03:21
appreciate that after 17 years of
00:03:23
unmitigated linear success it's very
00:03:27
difficult to retool yourself it's like
00:03:30
asking Michael Jordan to go and all of a
00:03:32
sudden become an all-star baseball it
00:03:33
doesn't work and so I think I I think
00:03:36
it's okay though this is my point it's
00:03:39
okay guys to have creative destruction
00:03:41
of companies like there was probably a
00:03:43
version of us blathering on about HP and
00:03:46
being nostalgic about the transistor
00:03:48
radio that they made and the you know
00:03:51
HP12B calculator that they made and oh
00:03:53
my god why can't they figure their
00:03:55
out and where are we today hp doesn't
00:03:57
even exist it's okay i mean just Thomas
00:04:02
the fact that they launched Siri they
00:04:04
bought that company and Siri can't do
00:04:07
anything other than like an alarm can
00:04:09
barely play a song it barely can do
00:04:12
directions i I I mean literally we're in
00:04:14
year like 27 of Siri and it can't do
00:04:18
anything and then I have the the Google
00:04:20
and Gro voice and when I turn that on it
00:04:23
does whatever I want it will load on my
00:04:25
Pixel it loads other applications fires
00:04:27
it off does specific tasks in it it's
00:04:29
absolutely discretzia on your on your
00:04:32
Pixel I have a Pixel when I when I flip
00:04:34
open my Pixel I have
00:04:37
to I have the Pixel 9 Chimath it's the
00:04:40
Anaconda of smartphones pixel 9 foldable
00:04:43
got it it's the greatest assistant ever
00:04:45
it's what Siri It's what Steve Jobs
00:04:47
showed Siri i had you at nine you had me
00:04:49
at Anaconda yeah I had you at 9 in and
00:04:51
we can all aspire maybe get Roman extra
00:04:54
get that extra inch thomas go ahead
00:04:56
chimath I would argue to you that I
00:04:57
think this management team has done it
00:04:59
once and it's in the transition of their
00:05:02
gross profit base which doesn't show in
00:05:04
the chart that you just highlighted but
00:05:07
was something that I kind of lived as an
00:05:08
analyst covering the stock for a long
00:05:10
time where if you remember over a decade
00:05:12
ago 90 plus% of their gross profit was a
00:05:14
onetime hardware sale on the iPhone and
00:05:18
no one thought that they would ever be
00:05:21
able to get away from the drug of
00:05:23
selling that one iPhone unit right and
00:05:25
cut to you know over a decade later it's
00:05:28
40% right and I don't think they get
00:05:31
enough credit for actually transitioning
00:05:33
from hardware to a recurring gross
00:05:35
profit base but look you might argue
00:05:38
that that was an easier pivot and
00:05:39
challenge than what they're going to
00:05:41
face and so let's see whether they can
00:05:43
do it
00:05:44
the other thing guys I wonder about um
00:05:47
let's I know we want to talk about IPOs
00:05:49
but I do wonder whether Zuck buying
00:05:52
scale for 15 billion gives air cover for
00:05:55
other companies to really start being
00:05:58
aggressive right and and to me as we
00:06:01
think about circle and coreweave two
00:06:03
companies that have gone IPO recently
00:06:06
it's it's kind of amazing kind of
00:06:08
numerically that the charts are almost
00:06:10
identical even you know on a dollar
00:06:12
basis on a share price right because to
00:06:16
me what it says we were talking about
00:06:17
the dispersion of the Mac 7 before right
00:06:20
which are going to do well which are not
00:06:21
i expect we're going to have a lot of
00:06:23
opinions on this over the next few years
00:06:24
and frankly they may change we you know
00:06:26
we may think Apple one way today it may
00:06:28
change in a month right but I do think
00:06:31
the market is starting to realize that
00:06:33
there is dispersion that AI might create
00:06:35
some all winners or some winners and
00:06:38
then some losers right and is starting
00:06:41
to think about okay how do I want to be
00:06:43
positioned for the next five years what
00:06:45
are big open-ended growth opportunities
00:06:47
and here comes two companies one lever
00:06:49
to crypto right and the other lever to
00:06:52
AI so I don't think it's a surprise to
00:06:54
me these things are intertwined you're
00:06:56
100% on because here's the thing the
00:06:59
average profit margin of the S&P 493 is
00:07:03
drum roll please 12% the average growth
00:07:06
of the S&P 493 is drum roll please
00:07:09
single digits so to your point why would
00:07:13
you belong any of these 493 companies
00:07:16
that may turn around and one day just
00:07:18
get decapitated by something you don't
00:07:19
even know that's getting cooked up by a
00:07:22
couple kids in a garage using OpenAI or
00:07:24
Grock or what have you it just makes a
00:07:27
lot more sense when you find investable
00:07:30
companies in the big themes of the
00:07:31
future to at a minimum hedge right be
00:07:35
less long the past and frankly make some
00:07:39
bets about the future and I think that
00:07:41
that's where you're seeing these IPOs
00:07:44
just absolutely rip what is a better
00:07:46
comparison in my opinion are the
00:07:48
companies that are truly levered to the
00:07:50
future themes of AI and crypto versus
00:07:53
any of these IPOs that have happened of
00:07:56
companies that are not and I think what
00:07:58
you see is there's a dispersion there as
00:08:00
well and they are being treated almost
00:08:02
as similarly Jason as the
00:08:05
S&P 493 it's like yeah it's good yeah
00:08:09
it's fine they get some reasonable gains
00:08:11
but if you're lever to any of those two
00:08:13
two trends you're off to the races
00:08:16
because it's just so disruptive people
00:08:19
don't want to be bag holding these old
00:08:21
legacy companies
