0:00

It's time for Windows Weekly. Paul Therat is here. Richard

0:02

Campbell is here. Actually, Richard is

0:04

in London, but that's

0:06

okay. He's still with us. They're

0:08

going to talk about the earnings, learnings,

0:11

Microsoft's quarterly earnings, lots of

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Windows news, AI news, even

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gaming news. It's a big

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Weekly coming up next. Podcasts

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you love. From people you trust. This

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is Truth. This

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is Windows Weekly with Paul Therat and Richard

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Campbell. Episode 866 recorded Wednesday, January 31st,

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learning comm slash twits Hello

2:18

windows and dozers winners

2:20

and dozers. It's time

2:22

for Windows weekly. Whatever. You know who you are That's

2:25

because this is the show where we cover

2:27

the latest news from Microsoft and you're dying

2:29

to learn those learning earnings All

2:32

to yourself Paul. Thorat is here He's

2:35

gonna take the role of Mary Jo Foley. I

2:37

guess today with the earnings learnings from

2:40

torat.com This used to

2:42

be Mary Jo's job now you got to do

2:44

it I'm sorry Richard

2:50

Campbell's also here. Well, he's not here. He's there. He's

2:52

over The over

2:55

the pond in sunny old

2:57

England How

2:59

sunny is sunny old England mister not a

3:01

sunny at all. Yeah, yeah, and you're crying

3:04

out loud. It's great grim Wait,

3:06

I made it to the whiskey exchange today. So

3:08

I have a thing to show not so bad

3:12

No, it'll be a little show-and-tell later on right But

3:15

first I guess earnings. Yeah Yeah,

3:19

we're in earning season again my least

3:21

favorite time of the quarter How

3:26

I forget this is part of how I cope

3:28

with things I just forget and then I sit

3:30

down and I look at my Feed I'm like,

3:32

oh god Microsoft Google Intel and

3:34

what's going on is this bunch of

3:36

stuff? So obviously we'll start

3:38

Microsoft They're doing okay.

3:41

The little startup that could from

3:43

Albuquerque is along a long

3:46

way Yep,

3:49

it's fun. There are a lot of people

3:51

who don't know that Microsoft's first corporate headquarters

3:53

was in. Yeah I wish they were

3:55

still there that building is labeled

3:57

right? It's got a big plaque on the

4:00

side of it. Oh yeah, so when you're washing a laundry

4:02

next door and buying a crack on the other side of

4:04

it, you have a place you can look at it. It's

4:06

nice. It's a nice

4:08

central Ave. It's

4:11

nice. They ran their contents was there,

4:13

right? And they wanted to

4:15

do it out there basic. That's

4:18

right. Well, I did do. I did do. Yeah,

4:20

for me, I used to live in Albuquerque, so it was a big

4:22

deal. You know, I had to run down there one day to find

4:25

out, you know, to look at this place. And I was like, really?

4:27

This is it, huh? It's too bad. It's

4:30

probably a little nicer now, but last

4:32

time I was there. I remember one

4:34

of the MVP summits when Bill

4:36

was there, somebody had found had

4:38

had an original manual for

4:41

the Altair basic. I think it was the second

4:43

version, the 16 K version. And

4:45

the back page of it literally said, if you

4:47

need support for this, call Bill

4:50

Gates and a phone number, right?

4:52

Like seven digits. So,

4:55

you know, he certainly waved his left. Let

4:58

him come up on the stage and he looked at it

5:00

and signed it for him. And he was moved like he

5:02

was emotional about it. Super cool. Bill was

5:04

the other guy. No, I can't know.

5:06

I'm sorry. I would have been like, so I

5:08

can call you now, right? Yeah, probably said, did

5:10

you lie with this? Give

5:13

me back my paper tape. By

5:16

the way, my Altair is running right

5:18

now. It's solving the advent of code

5:20

problems. Nice. Some year

5:22

it'll be done. No, it's

5:24

not. It's playing a little game with

5:26

itself. We're going to give it the quantum competing

5:29

upgrade. Ooh. Ooh.

5:31

Wouldn't it be funny to ask a

5:34

large language model inside that Altair? You

5:37

could ask it questions. All

5:40

right. So Microsoft's earnings came out.

5:42

Give us the yesterday. Give us

5:44

the top line. Broad stroke. Broad

5:46

stroke. Okay. Like I

5:48

said, basically almost $22 billion in profits and $62

5:50

billion in revenues. Those

5:54

figures are both up double digits. Revenues

5:57

are up 18% year over year. You're

5:59

going great. Great. No big

6:03

changes with the top three business units, or

6:06

the only three, I should say. Intelligent

6:08

Cloud's phone number one, 26 billion in revenue

6:10

basically up 20% year over year. This is

6:13

Azure, right? Productivity and

6:15

business processes, Microsoft 365 essentially is

6:17

almost 20 billion in revenues, up

6:19

13%. And

6:21

then more personal computing closed the gap a bit

6:24

because of Activision Blizzard, which we're gonna get to.

6:28

16.9 billion in revenues, up 19%. If

6:31

you pulled Activision Blizzard out of that business, oh,

6:35

how we'd laugh. The

6:38

rest of that, but they're looking pretty good. So

6:42

yeah, this all these kind of,

6:45

I have some bullet points here, but the

6:47

more interesting stuff to me is going

6:49

back and rereading the transcription

6:53

of the call they have with

6:56

analysts after the announcement.

6:58

And obviously everyone's asking questions about

7:00

AI. How are you gonna pay for this? How's

7:02

this working? What are you gonna be profit? How's

7:04

this all working out? So there's a bunch of

7:06

interesting stuff in there. Did

7:08

they actually answer any of those questions? If I don't

7:11

know what they want. No, well, no they do. I

7:13

mean, no, it's actually, this

7:16

is the second time in the past year where

7:18

I felt like their answers were actually really

7:22

clear. And not off skating anything

7:26

in any major way. So

7:31

I mean, I will also say whatever it's worth, such

7:34

an adult, I think he's a little bit wooden, but

7:37

man, that guy can speak quite eloquently

7:39

about AI. He loves

7:41

it. And I think

7:43

that says a lot about him

7:45

as a person, but also why

7:48

the company is so serious about this. It's very

7:50

clear he understood. This is the best he's made,

7:52

right? Yeah,

7:56

but let's, if you don't mind, let's

7:58

start with Activision. Blizzard because I found this

8:01

to be kind of interesting. Last

8:03

summer I ran some numbers on what

8:05

Microsoft would look like if Activision Blizzard

8:08

had been part of the company already, right? And

8:10

now that they are, I'm delighted to report that the

8:13

thing I wrote last July was really accurate, like

8:15

it's within like a half a percentage point, you

8:17

know. And the broad

8:19

strokes on that is that the

8:22

impact on more personal computing is huge.

8:25

The impact on Microsoft

8:29

as a company, not so huge,

8:31

right? Because Microsoft is

8:33

humongous, right? We saw 62 billion, right? So I

8:36

don't remember the exact numbers, but in that year I

8:39

looked at revenues from Activision Blizzard

8:41

were in the two, maybe 2.4 billion

8:43

range. You know, Microsoft were talking 60 billion.

8:45

So you can see it's a kind

8:48

of a smaller deal. But this

8:52

billion here, a billionaire, you might actually

8:54

show up on the balance sheet, right?

8:56

Like it's a lot to make a

8:58

dent. Yeah. So more personal

9:00

computing had really almost 20% growth this

9:02

quarter. Microsoft gaming. Yep. Huge, right?

9:07

And it's all because of this, right? And so

9:09

this, this is the deal.

9:11

Microsoft also, speaking of clarity, explaining

9:14

great detail how they're paying for

9:16

the costs associated with this acquisition.

9:18

I don't mean the $69 billion

9:20

exactly. I'm talking more about the 10,000 people

9:23

that came into the company

9:25

when they bought this other company, all

9:27

the redundancies, the layoffs and all

9:31

the, you know, the reorgs and all that stuff. And so

9:33

they, there's actually kind of a neat little bit in there

9:35

where they kind of talk about all that and that the

9:37

deal is within this

9:40

fiscal year, those costs are all going

9:42

to even out. The big takeaway

9:44

for me going forward is that this

9:47

business, within a business, Microsoft gaming right

9:50

now is operating at about 38% higher

9:52

costs than

9:55

they were like a year ago. And it's

9:58

because they laid offs it on like 2000. from

10:00

Activision already. Yeah. Yeah. And

10:02

from other parts. Yeah, right. So, you know, this

10:05

is a typical situation

10:07

where you kind of bring this company in house in

10:09

this case, right? It's not a separate organization. So

10:11

you have all these redundancies all over that part

10:14

of the company. So the whole marketing edge is

10:16

going to change, the HR group is changing. Yeah.

10:18

So hopefully they pick the best from the best

10:20

and kind of go for it in that fashion.

10:22

And, you know, unfortunately there will be layoffs probably

10:24

more in the future as well. But the

10:27

goal is within the next, what did I say, five

10:29

months, for this to kind of iron out and then

10:31

this thing will be like a net win going forward,

10:33

I guess. You know, the question is

10:35

like, are we going to leave the game teams

10:37

intact? Because it doesn't

10:40

seem like they've been really great with game

10:42

development teams. So

10:44

without, yeah. Right.

10:46

So without knowing explicitly, and again,

10:50

I don't remember the exact number, but

10:52

Activision Blizzard across their 10,000 employees

10:54

had several dozens of whatever the

10:56

number was of their own studios,

10:58

right? Right. And Microsoft also has

11:00

many, many studios of their own.

11:03

And some of them might be

11:05

some facilities consolidation too. Yeah.

11:07

And I think they'll, it's possible that

11:09

the big studios that worked under

11:12

Activision Blizzard, you know, the studios

11:14

responsible for Call of Duty, etc.

11:16

will probably be the

11:18

same, you know, that's the most part. Well,

11:21

in their case, I mean, I wouldn't, I mean,

11:24

Call of Duty is a cash cow, but

11:26

you have to ship a product to make

11:28

that money on it. World of Warcraft and

11:31

Diablo. Now that's some serious cash cowage. They

11:33

get monthly returns and you have

11:35

to produce a certain amount of content. So I mean, if

11:37

I was Satch's reporting

11:40

to Satch about how this thing is going, it's

11:42

like, is that team intact? Are they in track

11:44

to keep folks engaged? I mean,

11:46

World of Warcraft's gotten a lot of pressure

11:48

from the Sony

11:51

Final Fantasy Online product. So

11:53

they're, they've got every

11:55

need to be more efficient and

11:57

to keep growing the pattern. It's

11:59

hard to. be a new world of Warcraft. It's

12:01

about keeping the existing market. I

12:04

mean, depending on the

12:07

studio, depending on the product, they're

12:09

probably going to want to keep it, you know, where

12:11

they are geographically, in

12:14

roughly the same, you know, situation they were before,

12:16

right? And you would think that a

12:18

company like Microsoft, and there's a lot about software developers,

12:20

no, you disrupt that team, it's

12:22

years to get back to the same product. And

12:24

you may never actually get back. Yeah, I mean,

12:26

it might break the product. There's also a fear

12:29

with Call of Duty, it's already been broken and

12:31

that, you know, we're just going to lose it

12:33

broke it before they got their hands on it.

12:35

So now they need a reboot. Yeah,

12:38

maybe. I mean, yeah, we'll see. I mean,

12:41

they've needed a reboot since they wrapped up,

12:43

I don't know, the initial set of black

12:45

ops games, maybe. So whatever that was 10

12:47

years ago, it's been a while, but this

12:50

is what happened to Halo, right? Like, oh, yeah.

12:52

Yeah. There is a, there is a case story

12:54

for you lose the team and at least you

12:57

lose the heart of the team and now, you

12:59

know, what's the state of those products? But

13:01

that's fine if you're just releasing titles. It's

13:04

another thing when you've got a monthly and

13:06

you're going to watch your mistakes bleed you

13:08

month over month. That's,

13:11

that's really dark. A little graphic.

13:17

It's the thing is imagine that you bought a

13:19

goose, it's lays golden eggs.

13:21

Yeah. Don't screw it up. Yeah.

13:24

Now it's just bleeding. Uh,

13:28

yes. So yes, I mean, we'll see. Uh, I

13:30

mean, this is, I look, I'm a

13:32

simple person. I just want to see Activision games

13:35

on Xbox game pass. That's certainly

13:37

part of the cross marketing and so forth.

13:40

You know, someone who's done a bit of

13:42

M&A and been on the, how do we preserve the culture

13:44

side of the problem? It's like, these are

13:46

the things I would worry about is how do

13:49

I keep these key teams in place? How

13:51

do we, how do we know there's going to be a new call of duty in 24? Yeah.

13:55

Well, one of the ways would be, how about some

13:57

Microsoft stock options? Um, that stuff's going through the roof

13:59

right now. So just, you know,

14:01

that would be one idea. I don't

14:03

know. It

14:05

is interesting though, Microsoft actually spelled out

14:08

how much Activision contributed

14:10

to the growth in the various parts of

14:12

the business. And if

14:14

this thing wasn't happening, um,

14:17

we would be having a very different discussion about

14:19

the future of my personal computing right now. Well,

14:21

very likely they'd be acquired something else. So they'd

14:24

be going into, they would tell the story differently,

14:26

Paul. Like they know how to keep their share

14:28

holders happy. Well, I

14:30

mean, right. But it's, it's, we're

14:33

close enough to when they finally finalized this

14:35

deal that if it hadn't gone through, they

14:37

wouldn't have had a chance to do anything

14:40

by now. Like we would have been witnessing

14:42

what like an ugly holiday quarter looks like

14:44

for a business that's based around gaming,

14:46

which should be doing gangbusters, you know,

14:49

uh, or at least as partially through the gaming. Anyway,

14:52

I thought there, I sort of appreciated the clarity

14:54

on that. Although, you know, it's Microsoft, right? So

14:57

we like, one of

14:59

the things they reported was that they now have

15:01

over 200 million monthly active users on Xbox PC

15:04

and mobile and mobile for the first time.

15:06

Right. 200 million. That's

15:08

a huge number. It's a huge

15:10

number. But of course, my next question, my

15:12

first question was, okay, but what, compared to

15:15

what, like, what was it before? And

15:17

the only thing I could find, because they do this a lot,

15:19

they don't do this quarter over quarter. But

15:21

back in the July quarter, they mentioned that

15:24

the 150 million active users,

15:26

uh, at that time, they were just talking

15:28

across the Xbox ecosystem. And,

15:31

uh, so I guess it went up by

15:33

50, but they also talked about how Activision

15:35

Blizzard brings hundreds of millions

15:38

of users to Xbox. So

15:41

it's like, if anything, you would almost think it

15:44

should be higher, you know, but it is a

15:46

big number. You're right. Um, yeah. So, you know,

15:48

Activision Blizzard has a pretty big reach. Um,

15:51

for a relatively small number of people when you think

15:53

about it. Yeah. Yeah. Yeah. All

15:55

in all, it was a good buy for

15:57

Microsoft, but I don't know. have

16:00

a great track record with game studios

16:02

except the ones they leave alone, right?

16:05

And they're absolutely not doing that in this case.

16:07

Not this time around. I think that was part

16:09

of the marketing of this purchase though that they

16:12

were going to fix the culture. It was more

16:14

because there was something to fix. Yeah,

16:16

I think that's purely cultural. Right. I

16:18

think that might explain it. Yeah. But yeah.

16:21

And it's not like Bethesda is knocking out the

16:23

part with every game they make either, looking at

16:25

you Fallout 76. But

16:28

that was in Microsoft's fault. Like I

16:31

would hope there's some folks from coming in

16:33

on the ZeniMax level saying, guys, are

16:35

we doing the right thing? Are we building

16:37

the right product? Like are we making people

16:40

happy? Because they've got some great labels

16:42

too that would be well worth to follow.

16:45

The Fallout is an amazing story

16:47

that could be tapped a lot of different

16:49

ways. It should be a series on

16:51

Netflix. I don't understand why it isn't.

16:54

And maybe it will be someday. I mean, Half-Life

16:56

is the same thing. Why has that not happened? Well,

17:01

because everybody that works for Valve is

17:03

extraordinarily wealthy. Oh yeah, that's right. That's

17:06

right. Content middle-aged white guys. Yeah.

17:09

So, the upside to Activision Blizzard and Microsoft

17:12

too is there's a routine set of hungry

17:14

hires looking to get more of

17:16

their stock units

17:18

allocated and you can get them to do stuff. Right.

17:21

But the collective that is Valve,

17:23

everybody's very well paid. Yeah,

17:26

nobody needs another Tesla. Yeah, they're doing okay.

17:29

Yeah. Well, I

17:34

think that's

17:37

mostly it on the gaming part of it. I

17:39

kind of, when

17:41

I go through the earnings, I go kind of back

17:43

to front because I focus mostly on the consumer stuff,

17:45

right? And it's a small part

17:47

of Microsoft in some ways, but it's

17:49

getting more interesting thanks to Activision Blizzard and

17:51

AI. Yeah.

17:54

I think this time next year, the

17:57

conversation about Activision Blizzard will be very

17:59

interesting. Well, under Microsoft's control,

18:01

getting through Christmas season, that's going to be a big

18:03

deal. I can't wait to see what it comes to.

18:05

Are we good or are we bad? I hope it's

18:07

great. I'm looking for it just

18:10

being the same, which would be fine. If

18:13

every one of their major labels ships a

18:15

product in October this

18:17

year, they'll have killed it. That's a win. You

18:20

have described something that Microsoft has never done

18:22

with their gaming business, but yeah, I hope

18:25

that happens too. I mean, unfortunately,

18:27

yeah, we'll see. I don't want to

18:29

get ahead of ourselves here, but yes,

18:31

I hope you're good. I hate to

18:33

say this, but it's like, this is

18:35

very Sanosky-esque. Sanosky was the train's run-on-time

18:38

kind of guy. You want

18:40

someone, it's like, you will make

18:42

the October deliverables for Christmas or

18:44

you will be killed. Oh, that

18:46

does not work at games. I

18:48

don't know, but it is how

18:50

games work without a doubt. You have to write to the

18:52

deadline, which is why you tend to ship lousy software because

18:54

you write to the deadline and we'll fix it in the

18:56

DLC. Okay. Well,

18:59

anyway, I don't want to be gaming to death

19:01

too much upfront because we're going to return to

19:03

this in a moment. Well, at the end of

19:05

the show, actually, but just to round

19:08

out the rest of more personal

19:10

computing, there's a little business called Windows that is also

19:12

part of that. Never heard of it. It's

19:15

kind of an operating system for these big

19:17

devices that you can't barely pocket. Yeah, it's

19:19

like smartphones, but dumber. So,

19:24

will it run AutoCAD? Oh, wait, it's the only thing

19:26

that runs AutoCAD. They've

19:28

had a couple of bad years

19:30

post COVID. And as we're seeing

19:32

with the chipset makers, both on

19:34

PC side and on mobile, it

19:37

looks like things are starting to finally kind

19:39

of come back to normal. Intel

19:41

saw some growth on this side of the

19:43

business. AMD did, again, both companies after months

19:45

and months of quarters and quarters of

19:49

shortfalls. And,

19:52

you know, their Microsoft's revenues from PC

19:54

makers actually grew and grew by double

19:57

digits. So

20:00

last quarter was 4% this year. This

20:02

quarter was 11. And the previous

20:04

two before those two were 12 and 28% decline. So

20:07

you can kind of see how that curve is

20:09

going. That's hard to corner. Yep.

20:12

They keep using this phrase. Things

20:14

are continuing at pre-pandemic levels,

20:17

which is a bit of a stretch. If you

20:19

know anything about pre-pandemic levels, but certainly. I

20:21

don't think we're predicting the demise of the

20:23

PC pre-pandemic too. Well, the

20:25

question, yeah, the question that was whether

20:27

it would ever bottom out. And then

20:29

the pandemic kind of knocked things around

20:31

in the opposite direction. But yeah,

20:34

it looks like we're, yeah, so we're in the

20:36

right trajectory. Certainly. Um, commercial was

20:38

also up commercial windows revenues. I should say

20:40

those are kind of tougher to predict because

20:42

these are just based on. Versus

20:45

cycles that we know nothing about, right? These are

20:47

things that companies keep internal and are basically sacred.

20:49

So, uh, but 9% growth

20:51

is great. Um, and this is a

20:53

business that has seen growth in all four of

20:56

the previous, uh, orders. So they're doing,

20:58

they're doing good. Um, and

21:00

that's basically all we learned about

21:02

windows. Although I'm just going to throw this

21:04

up because I thought this was an odd

21:06

thing. They're Microsoft, like all other companies makes

21:09

these kind of, um, milestone statements, you know,

21:11

they have a quarter, something happens, we've made

21:13

money. And then they, they talk about some

21:15

of the things that they shipped or achieved in the quarter

21:17

and they don't always tie. In fact,

21:19

they often don't tie directly to any revenues of any

21:21

kind. So for example, in Microsoft's case, the one that

21:23

stuck out for me was. Copilot and

21:25

windows is available on more than 75 million

21:28

PCs. This

21:30

is across windows 10 and windows 11, 75 million is

21:33

the thing. Um,

21:36

Copilot and windows is a free upgrade

21:38

that everyone gets automatically. Yeah. Once

21:40

you put it on windows 10, I mean, wouldn't it be

21:42

on hundreds of millions of pins? Couldn't it

21:45

be billion? I'm saying

21:47

potential audience of a billion. Right. I mean, so

21:49

I don't know what to make of that. I

21:51

that's a shockingly small. Any,

21:53

yeah. In any other statements, 75

21:55

billion is huge number. This

21:57

is not one of those. This is a tiny number.

22:00

Yeah, it's very strange. Like

22:04

what the hell? Well, if you just base it on

22:06

a billion and make the math simple, it's

22:09

three quarters of one percent. Seven percent.

22:11

Or 7.5%. 7.5% I

22:13

guess. It's small. So.

22:15

So, a billion to me seems low. There's more

22:18

than a billion Windows 10 devices out there. Yeah.

22:21

I mean, but Windows 10 will guess somewhere around a

22:24

billion and then Windows 11 is the rest,

22:26

whatever that is. A couple hundred million maybe.

22:28

But still, this just seems odd to me.

22:30

I feel like everyone kind of gets this

22:32

and I don't quite get that one. So

22:34

maybe they're measuring actual usage somehow or? Yeah,

22:37

I'm sorry. I think that's a mostly active user

22:39

kind of mindset. Yep. Impossible to

22:42

know. You also get little floating

22:44

factoids like Windows 11 commercial

22:47

deployments were up 2x year

22:49

over year. 2x

22:51

from what? Was it zero last year? We don't even...

22:54

That doesn't mean anything. Yeah. And

22:57

these things are fairly random. No

22:59

big companies are going to ever publicly discuss

23:02

their strategy for rolling out a version

23:04

of Windows internally. Nobody cares. You

23:07

know? So, and I will also point out this

23:09

doesn't impact revenues at all because Microsoft doesn't care

23:11

which version you use either. They get paid the

23:13

same regardless. So. No matter

23:15

what. These are just... I don't know

23:17

what you call this kind of a data. It has nothing to do

23:20

with the bottom line. They're happy annoyances. Yeah.

23:22

Yeah. Just a little thing.

23:24

Yeah. And you can feel them kind

23:26

of cherry picking from around all the data they have.

23:29

Oh yeah. Totally. I've done

23:31

enough investor relations to know with my wealthy investors I

23:33

need to give them a sentence they can say to

23:35

their friends in the clubhouse. Okay. It

23:38

doesn't matter that it's meaningful or it actually

23:40

quantifies anything but it's a sentence they can

23:42

say to their fellow wealthy people. Okay.

23:45

Well, that's definitely... I didn't

23:48

publish this article yet but I coined

23:51

the term non-mot as

23:53

opposed to bond-mot. It's

23:56

a 9-11. Right. happy

24:00

noise headlines

24:03

without definition. Surface

24:06

is circling the drain frankly and I got

24:08

to say this is

24:10

a revenue time was only

24:13

9% in the quarter I say only because

24:15

this was far better than they expected previous

24:17

four quarters were 22 20 30 and 39

24:21

percent shortfalls right it's been a

24:23

brutal couple of years for this business and

24:25

unfortunately the the water that

24:27

is starting to lift windows does not appear

24:30

to be working for surface

24:32

so they don't have a leader well

24:36

he's fighting for him right he's

24:38

so faceless I can't remember you know what that's

24:40

not fair to him I'm sorry that's on me

24:42

I actually don't remember his name that's on me

24:45

he's a nice guy they never played him for

24:47

pano well the guy for sir the surface part

24:49

of panos right so they introduced

24:51

him at that October events and I'm sorry I should

24:53

I apologize I should you were there I don't I

24:55

was there and I'm not a new name but that

24:57

business is now focusing on higher margin premium products which

24:59

I'd like to be the last step you know it's

25:02

kind of like when Lumi a kind of focused you

25:04

know a little bit and then

25:06

when I'm here I am with a surface

25:08

studio to like I'm literally exactly in

25:10

the market well this is what

25:12

expensive thing they made yeah yeah and you

25:15

didn't help them at all Richard I gotta tell

25:17

you they're not doing great no it's too bad

25:19

I'm like sorry I wish you something part of

25:22

that 9% man we sent

25:24

in something yeah what

25:27

it means use of many oh

25:30

no well since that no use of many has since

25:32

moved on because now he's running some of the co-pilot

25:34

stuff oh wow yeah he was kind

25:36

of in there for the two seconds and now

25:38

he's he moved right along holy man because that

25:40

was that was the October gate where they announced

25:43

that you said was taking over for any well

25:46

but but

25:48

this the person I'm thinking it was directly surface

25:50

and use of is not in charge of all

25:52

the stuff right different different people now and

25:56

then the other big one I wanted to kind of talk

25:58

about was just AI because obviously Microsoft is spending between

26:01

10 and 15 billion or at least that's what

26:03

they said one or two quarters ago. I think

26:05

it's actually higher now. And

26:07

there's a couple of interesting points in

26:10

there about AI. And

26:13

I'm going to read a quote from you. I quote you and tell me if

26:15

you come away with the same takeaway

26:18

I did. But obviously everyone asked

26:20

about AI, the cost of AI and you

26:22

know, when you start becoming profitable from AI

26:24

and there's a lot of happy noises there

26:26

too. But buried

26:29

in more personal computing is a business

26:31

I don't discuss too much over time

26:33

because it has never been particularly interesting

26:35

which is search and advertising. And

26:37

this is like you know, Bing, MSN,

26:40

Start and Microsoft advertising, right? The

26:43

past year there's been a lot

26:45

of noise and news about Bing. The

26:48

biggest being that they went to market with the AI

26:50

stuff starting with Bing and then quickly back off from

26:52

that. And as we

26:54

hit the end of the year, the

26:56

brand was now co-pilot and we're not talking about

26:59

Bing anymore. And Microsoft made

27:01

sure that this capability was

27:04

available in multiple places not just on Bing. And

27:06

you know, the market share, usage share of Bing

27:08

didn't move the needle at all. Right.

27:12

Some issues there. So that

27:14

business actually grew by 8%. This is

27:17

the search, news and advertising and

27:19

it said it would have been better except

27:23

the combination of higher search

27:25

volume and the continued unfavorable

27:27

impact from a third-party

27:30

partnership. What do you think

27:32

that was? Yeah.

27:35

I think it had to be OpenAI. Did

27:40

you really say that? You can't say that. They

27:43

did. They're making money. They

27:45

make money off OpenAI. No,

27:48

they do. But that's over in a different part of the

27:50

company. The part that holds Bing,

27:54

they're just paying for it. So

27:56

what they've done is they've driven traffic.

27:58

They've not monetized it effectively. And

28:00

then not paying the bills. So

28:03

that maybe explains or helps explain why

28:06

they went to market so quick with

28:08

Copilot Pro, right? Get people paying for

28:10

it. That will help them

28:12

now. That's part of that revenue, go back

28:14

to the Bing team. Yes. And

28:17

they can also detune the free stuff a bit. You know,

28:19

you'll have more of those error messages. We're sorry, we can't

28:21

do that right now. Are you not kind of thing? It's

28:23

like, you know, maybe if you... Yeah, you hate your request

28:25

for that. Yeah. All

28:27

those things. So if you bought Pro, this wouldn't happen to

28:30

you. That's what I'm thinking.

28:32

Yeah. And then, of course, the other bit

28:34

is how AI impacts the other parts of

28:36

the company. And for the short term and

28:38

possibly long term as well, the big benefits

28:40

to Microsoft are going to come in the

28:43

Azure side, which is intelligent computing, and

28:45

also to Microsoft 365, right? And

28:48

they confirmed this... It

28:51

wasn't like a genius idea I had, but they basically

28:53

came to the conclusion that Copilot Pro

28:55

and Copilot for Microsoft 365 were

28:58

Microsoft establishing higher end SKUs

29:00

for Microsoft 365 essentially. SKUs

29:03

that were much more lucrative. And this is the multi-skew

29:07

strategy that Microsoft Office started back in, I

29:09

don't know, 2000? 2003, the

29:11

latest. Has

29:14

always paid off for them big time. Microsoft tried it

29:16

with Windows. Remember, with Vista and

29:18

7, had several different product versions. They kind of scaled

29:20

that back. So now we have two. It's

29:23

always worked out great for Office. One thing that they've

29:26

seen on the Microsoft 365 side is

29:28

they add these more lucrative SKUs or

29:30

higher end SKUs. They become very lucrative,

29:33

like businesses. Everyone falls for that

29:35

same... Yeah, that upgrade thing. You walk in to

29:37

buy the cheap stripped down car and you walk

29:39

out with the Ferrari or whatever. And

29:42

it's always the thing is you go in thinking you're going

29:44

to buy the lowest SKU. And then there's enough things higher

29:47

up that are add-ons that when you do the math, it's

29:49

like just buy the higher SKU. I literally just did this

29:51

myself. I'm paying for CoPilot Pro. I walked

29:53

in like they could... Yeah, right. And I'm

29:55

like, oh no, 20 bucks a month. Nailed it. So,

29:58

yeah. I'm

30:01

contorting this a bit. I want to be super

30:03

clear about this. Someone asked

30:06

Sacha Nadella about GitHub Copilot specifically

30:08

because he talked so excitedly about

30:11

it. And he was talking

30:13

about how this thing was

30:15

so crucial for that audience. And he's right.

30:17

Of course he is. But he made some

30:19

allusions to productivity. And I

30:22

want to be clear. What he's really talking

30:24

about is Copilot, GitHub Copilot. But I think

30:26

this applies to data. But

30:29

I think this also applies to Microsoft 365.

30:31

So what he says is,

30:33

he's talking about the economic benefit of the

30:35

productivity benefits. And he

30:38

says it's like if you

30:40

took away spell check from Word, I would become

30:42

unemployable. Similarly, it would be

30:44

like if GitHub Copilot becomes core to anyone

30:46

who's doing software development, if you

30:49

take it away, they become unemployable. Microsoft's

30:51

goal clearly is to

30:53

make Copilot from Microsoft 365 slash Copilot

30:56

Pro have the same value. Essential to

30:58

the information worker. It's so essential that

31:01

paying that much money becomes a no-brainer. Right.

31:04

Right. That's the goal. And that's, you

31:06

know, they obviously have

31:09

different ways of monetizing AI

31:11

through Azure and APIs and all that kind

31:13

of stuff. And they have their own platform.

31:15

And they have customers that are using that.

31:19

But as far as selling directly, well, I guess

31:21

those are customers as well. But selling directly to

31:23

businesses using like end user

31:25

productivity software. I think the

31:28

goal is, you know, let's drive it there

31:30

as well. And I think

31:32

they're going to be successful just based on

31:34

my very limited. Well, and plus experience. When

31:36

you talk about M365, they've been trying to

31:38

find ways to surface the graft of solid-hate

31:41

businesses since M365 started. And

31:44

this is the current generation idea. And I think

31:46

it's a pretty good one. Like it's now that

31:49

you're describing the goal and it's leveraging the graph

31:51

to get you to your goal. Who can be

31:53

mad about that? Yes. Now,

31:56

you know, the fear that I raised,

31:58

I guess back in. December or

32:00

whenever that was I'll know I guess it was in

32:02

early January when they announced these products like all of

32:04

a sudden Hey, we're out. You know is

32:07

the same pair. I have now which is that there is

32:09

that? There's a problem

32:11

where the same wave that

32:13

lifted you during the cloud computing wave that's

32:15

starting to lift you now during the AI

32:17

Wave could come back and you know tsunami

32:19

you and That's when you

32:22

under deliver right or Two

32:24

quarters. So now Microsoft has to finally admit

32:26

that actually only some tiny 0.4%

32:30

of whatever our commercial customers have even looked at

32:32

this and you know Well,

32:34

let's get back to your 75 million users

32:36

of compiler, right? Right, right. That's

32:39

said what you're afraid of is that they don't adopt it.

32:41

That doesn't seem to be happening in m365 like Well,

32:45

yes, here's the loudest noises. I heard

32:47

was what 300 seat minimum. Come on

32:50

This is the tier strategy. So years ago.

32:52

This is a conversation actually with Chris

32:54

Capicella when you know Microsoft Office

32:56

was this business that they sold software directly to

32:58

people basically I mean really most people got it

33:00

with a new computer or whatever So they assumed

33:03

it was part of Windows. They didn't realize they

33:05

were paying extra for it Whatever, but people

33:08

acquired office in a certain way Very

33:11

successful. They at one point claimed 1.5 billion users, right?

33:15

And then office 365 came along and Microsoft

33:17

365 and those numbers are relatively smaller actually

33:19

today They're not so horrible and the commercial

33:21

side. It's somewhere in the three to four

33:23

hundred million range I can't I didn't see

33:25

it in this Quarter on

33:27

the consumer side. It's it's under 100 million.

33:29

It's something like 78 million something

33:32

like that It doesn't sound like a big number, right?

33:35

To anybody else do it. Yeah, and in

33:37

back when I had this conversation with Chris

33:39

He you know these numbers were much smaller

33:42

and he said and you know kind of seeing this the future

33:44

that now exists today That you know the thing you have to

33:46

understand is that Some number of

33:49

users doesn't help us if they never buy it

33:51

again, right? So right we didn't get 1.5 billion

33:53

sales one year We got it over, you know 10 years or

33:55

whatever the time frame was and then when you

33:58

look at you know We don't go from 1.5 billion

34:00

to 1.6 to 1.7, we go from 1.5 to 1.5 to 1.5. So we've reached this,

34:02

we've done it. Like

34:08

this is as far as it's ever going. And

34:10

the thing they look at as a

34:13

company is like, how do we induce people to upgrade

34:15

and how do we raise those numbers every year? And it's

34:18

hard. And then the subscription service thing came

34:20

around and changed the game completely. The

34:23

people who pay Microsoft every month, whether they're businesses

34:25

or consumers, are much more lucrative. I mean, this

34:27

is obvious, but you get

34:29

into a situation I see on my

34:31

own site, I'm sure Leo and Twit

34:34

sees on their service, Spotify

34:36

reports this very explicitly every quarter,

34:39

where you have some tiny segment of

34:42

the population paying you and some giant

34:44

segment just getting ads. And that tiny

34:46

segment is worth dramatically

34:48

more money per person than the ad

34:51

supported people. And that's true

34:53

for Microsoft with these tiers. And

34:55

the reason why E3 is so much more

34:57

lucrative to them than E3 is to down

34:59

to whatever else they might have. And

35:02

this is where CoPilot has

35:05

the real chance to change the game

35:08

for them because it just dramatically raises

35:10

the average. So

35:12

even a smaller, like a subset

35:15

of a subset that pays for this

35:17

additional thing is

35:19

going to be a big deal. I think it's going to,

35:21

no, I don't think, I know it's going to be a

35:23

big deal in ways, things like what's

35:26

the paid version of Microsoft Teams called Microsoft Teams Pro

35:28

or something or whatever that is. There's

35:31

the new teams for home and

35:34

school, but parentheses free.

35:38

Right. I mean, you can see the scale, you know,

35:41

but CoPilot is so valuable

35:44

that I, to users,

35:46

you know, I think

35:48

this is, I think it's going to work, you know,

35:50

and where I was sort of, I didn't understand it

35:53

back when I talked to Chris, the numbers were so

35:55

small, I just couldn't understand how this could ever make

35:57

sense. But now that they're bigger, you can see how

36:00

how it makes sense. You can see the growth that Microsoft 365 has, you

36:02

know, a quarter of

36:04

a quarter year of year, whatever for many years. Um, I

36:07

think this is going to jumpstart another, uh, period

36:10

of growth. Yeah, I hope you're right.

36:12

Right. I mean, I'm hoping that, and

36:15

this, this is where I thought the minimum 300 seat

36:17

thing was smart because it means the graph has a

36:19

certain richness in it. You

36:21

want to surface new knowledge about the

36:23

organization to their workers without them being

36:26

miners of that. And it just sort of appears.

36:29

I mean, folks who get out of the smaller

36:31

sets are just not going to get good results

36:33

and make no sense. They're not going to get

36:36

the same results for sure. I, I, that, that

36:38

I don't know anything about. I don't have a

36:40

business. I could even, I couldn't pay more and

36:42

see that because I don't have that kind of

36:44

a business. I, I know very, I kind

36:46

of want to index all the content on

36:48

throughout and see, you know,

36:50

what the machine learning model had to say about that.

36:52

We certainly answered the question, have I already written

36:54

about this is useful, but then it's just a search

36:57

engine. Right. There are a lot of

36:59

people who are more technical than

37:01

I am who write, you know, for publications online

37:03

who have done things like that. And, and that's

37:05

very interesting. People are building, you

37:07

know, one thing as a writer that

37:09

you see in other writing and can't

37:11

stand and try not to

37:13

do as a writer is use the same term repeatedly

37:16

in the same sentence or paragraph. And when you're writing

37:18

about a company, like say Microsoft, you say, well, Microsoft

37:20

did this and blah, blah, blah. And then the software

37:22

giant did that. And then the firm, something, something, and

37:24

then the company you try not to Microsoft,

37:27

Microsoft, Microsoft, right. And

37:30

someone built a little LLM that

37:32

is, or I

37:34

guess that's all I'm really right. That's designed

37:37

to help them overcome that. Right. Right. I

37:40

don't think she even, you know, you saw

37:42

this too. Yeah. Yeah. I don't think she

37:44

trained it. I think she just asked chat

37:46

GPT or co-pilot. Okay. And, but it's a

37:48

good use. It's another way of saying Microsoft

37:50

or the company, you know, yeah, that's a

37:52

great word. If you really on your content,

37:55

I think somebody at the information was doing

37:57

that training on your content. Then

37:59

you could, you know, maybe say how have I

38:01

phrased this in past quarterly reports, sir?

38:03

I have done as recently as

38:05

this past week, I've written thousands of words

38:07

on a topic. And then I

38:10

referenced something, some things I'd written earlier, and then

38:12

I realized I've repeated myself a bunch of times

38:14

not and I don't mean in language. I mean,

38:17

in literal just I'm having a discussion about a

38:19

certain topic and I'm like, I've written about this,

38:22

you know, it's hard when you write as much

38:24

as I do to, it's in your brain. It's

38:26

like when you talk to

38:28

someone you're like, I've, I've told people something's happened.

38:31

Happening. Are you one of those people? I don't

38:33

remember. You know, that kind of, you know, we

38:36

must have what I want. Yeah, that's totally what

38:38

I want. You're repeating yourself Leo.

38:40

Oh, thank you. Yeah. I've always

38:42

told this story 12 times. Thank you.

38:44

Repeating is fine. Skipping is the problem.

38:46

You don't want to be the broken

38:48

record. Did you you haven't mentioned

38:50

yet, Microsoft saying that they're going to put

38:53

co pilot on vision pro. They

38:56

didn't. They knew Microsoft. I mean, Apple

38:58

nerd helmet. Yeah, well,

39:00

good for them. They'll be fun. That's

39:02

one app for the pro. Are there any other they're

39:04

going to do? I don't mean to be, I know

39:06

they're going to do teams, you know, a bunch of

39:08

stuff. I very specifically have

39:10

tried to know the outlook PowerPoint, but

39:13

now I did about this Apple thing.

39:15

Oh, but now that it's popped into

39:17

the marketplace, I just can't generate any

39:19

enthusiasm for it. I am

39:22

trying really hard not to be like that. But

39:24

I just don't care. Good.

39:26

I make you feel like a jerk because if this thing

39:29

takes off, I'm gonna look like a jerk and nobody

39:31

wants to take a jerk. But it ain't

39:34

good. I just don't want to I don't

39:36

want to I just don't see it. PNA

39:38

based Cheerios. I want to let them enjoy

39:40

their cardboard. Actually, I think you could

39:42

because they can't see you Leo just walk

39:44

right up and let her rip. You know,

39:47

what's the difference? Yeah,

39:49

I can't imagine doing product. Where'd my guys

39:52

in the dark? Was hollow lens? I mean,

39:54

they wanted to do productivity and HoloLens too

39:56

did that. HoloLens

39:58

was well, so here's the The two

40:00

phases I remember for HoloLens were the initial

40:02

announcements where they had no idea what anyone

40:04

was going to use this for. If you

40:06

go back and look at that very first

40:08

one from January 2015, they

40:11

showed up a video game, right? At

40:13

the second one, they had a 3D

40:15

version of Minecraft, right? Which

40:17

wasn't the full game, it was just an experience. We stood

40:19

in the room and you could see Minecraft and it was

40:22

a castle on a table and there was a hole in the

40:24

wall and that blew out of it. Yeah, yeah, it was so

40:26

cool. I remember that, yeah. It was really cool, but what the

40:28

heck is- I couldn't wait for it. You're

40:32

talking about a device that's going to sell in

40:34

the hundreds of thousands and who's going to develop

40:38

such a thing. Anyway, the second phase was we

40:42

have threw it out there, we've seen

40:44

what's come back and what we've seen

40:46

is some reasonable-

40:49

I keep calling niche markets, it's not there, vertical

40:51

markets, right? I always cite the

40:54

car makers, instead of walking around a model made of

40:56

clay, you can walk around a model that was made

40:58

in AR space or whatever. But

41:01

Alex came in and was always big on the verticals,

41:03

he didn't want to just fire it up in the

41:05

ecosystem and see what happens. He pursued

41:08

the medical construction vertical and

41:10

things like that. Maybe one

41:12

of the few things you ever get, right? I

41:15

always thought that the demo where you're working with

41:17

wiring and the little guy is in the window

41:19

and he says, not the blue wire, the yellow

41:21

wire. That to

41:23

me always, yeah, that would be useful. I

41:25

could use that. Would I

41:27

pay $3,500 for that helmet so I could use it for 10

41:30

minutes with the one day a year I need it? No.

41:33

No, but it made sense for

41:36

the folks working on jet turbines

41:38

and repairing heavy equipment. Like anything

41:40

where the cost of the equipment

41:42

was so much higher that it's not just the

41:44

$3,500, it's a thousand in Azure you need a

41:47

month to run that thing. I

41:49

think it was expensive infrastructure. Yeah,

41:52

if Microsoft, I don't know how it happened. If

41:54

Microsoft approached the army or the army came to

41:56

them, I don't know. I don't really care. I

41:58

don't think it matters. But if

42:01

that hadn't happened, if they hadn't

42:03

found the one entity in the world that is

42:05

known for spending $12,000 on a hammer or $20,000 in a toilet seat.

42:10

But it's also all consuming, so they ended

42:12

up doing nothing else. Well, you

42:14

know, I honestly, for

42:16

that business, I mean, looking at survival, I think

42:18

it made sense because I don't think the rest

42:20

of it was going to promote anything. I think

42:22

some other verticals could have been out

42:24

there, but I mean, tech

42:27

giants don't like small

42:29

markets. Like it has to be a

42:31

multi-billion dollar business for it to make

42:33

sense. So I don't know that Microsoft

42:35

would have stayed in where, you know,

42:37

the army dangled a gigantic carrot that

42:39

nobody got. So

42:42

they, I think HoloLens would have

42:44

disappeared years ago if that hadn't happened. I just think

42:46

it wasn't going to make, and I

42:48

don't look, the technology was fascinating from the get-go.

42:50

It got way better with the second generation for

42:52

sure. Remember they, we used to have that kind

42:54

of field of view problem. The field of view

42:56

was a bit bigger in the two, but it

42:58

still wasn't good enough. So it wasn't perfect. Yeah,

43:00

but it was demonstrably better. And you

43:02

know, their feeling at the time was like, they'll keep doing, you

43:05

know, every generation will keep seeing that

43:07

we had never got past two. Actually, we have to. Well,

43:10

I mean, I've talked to folks there, like they're

43:12

waiting on hardware. The

43:15

right hardware comes down the line, they'll make another one. Okay.

43:18

Well, okay. Well, yeah, we'll see. I guess we'll

43:20

see. I've heard that too, but it's been a while

43:22

since I heard it. But

43:24

yeah. It's been a while, but

43:26

I mean, I heard it recently is last year. Okay.

43:30

They're still a team. They are kind of in stasis.

43:33

They're kind of hung on the army thing, which isn't

43:35

quite dead yet. They taking care of

43:37

a mitt full of verticals that do use it. And

43:40

everybody wants new hardware, but until they have a compelling story

43:42

for the new hardware, they're not going to pull a trigger.

43:46

Yeah. Okay. I

43:48

mean, I wonder what kind of a human

43:50

being would sit still a part of a business like that

43:52

waiting for something to happen. It's like,

43:54

you know, by the way, is the, yeah. And

43:57

also guy who's got enough money that it doesn't.

44:00

You know do it. Yeah, I think Microsoft guys

44:02

jobs are on the line, right? I give a

44:04

lot of those guys the experts who were working

44:06

on that stuff went to meta You

44:08

know well a bunch of them did without a doubt

44:10

and now I've gone elsewhere Right,

44:12

right because you know I talked to one of them

44:15

I talked to one of them is that dude I'm

44:17

getting a sinus bonus that I can sign a house

44:19

with yeah All I have to do is stick around

44:21

for a year Yeah, and then one way either I'm

44:23

gonna walk out of there with more knowledge about contemporary

44:26

VR than anybody else Tell me the downside to me.

44:28

Yeah, but you know who get the big bucks is

44:30

the AI researchers And that is

44:32

now that is a competitive field right now. Oh,

44:35

yeah, well million dollar Yeah, I mean dollar,

44:37

you know signing bonus This is gonna be

44:39

the side hustle of 2024 how to correctly

44:41

prompt a GPT to get something you want

44:44

You know well I know that

44:46

where the money is to do that the tech

44:48

giants that aren't leading that are trying to catch

44:50

up Yeah, like you who's spending a lot of

44:52

money right now Apple and Facebook Yeah,

44:55

right that's right Right,

44:57

I don't know that Amazon say he's

45:00

seriously still and Microsoft Google or

45:02

in the race It was it's funny you

45:04

could point to any of these companies and say like how would

45:06

they like Microsoft? You know and Google

45:08

obviously strong parallels, but Amazon honestly And

45:11

I think God it could partially

45:13

because so many X Microsoft executives went

45:15

through there as their first stop outside

45:17

the company But there is a

45:19

real Microsoft kind of a vibe to Amazon

45:22

sometimes Isn't there kind of a seal of

45:24

a new shop? Yeah, you know

45:26

like it's it's interesting so I I Can't

45:30

I can't understand what Amazon's doing This

45:32

is a company that has a giant

45:34

consumer ecommerce business in a

45:37

giant cloud computing business And

45:39

this thing lands right in the middle of exactly

45:41

everything that matters to you the most and I

45:43

like doing exactly You know the

45:46

worst number is curse for companies to be

45:48

successful. I think it's really

45:50

makes it hard leading sucks Right chasing is

45:52

something you know how to do yeah Let's

45:56

pause briefly. I know you have more earnings learnings

45:58

and man we have learned much but

46:01

my brain is feeling heavy my

46:03

heart is being sad no no it's

46:05

not happy it's happy. I

46:09

did not buy a Vision Pro but

46:12

Mike and we got one for Mike. Did you

46:14

talk to Elmo online this week is that what

46:16

this is? Yeah Elmo no

46:18

no I did not talk to

46:20

Elmo. Did you hear about Elmo?

46:22

He went online to find

46:24

out how people were doing and what he

46:26

got back was the saddest story of all

46:28

time from everyone who is circling

46:31

the drain emotionally. Oh it's doing well

46:33

right now. Don't ask that question.

46:36

It's a weird thing. You know when people

46:38

ask you how are you doing they're just

46:40

being polite. They're not looking for a dissertation

46:42

on your divorce and everything that's wrong in

46:44

your life you know. Yeah finally we've got

46:46

keep walking. Suddenly it's cutter Elmo just trying

46:48

to feel something. Yeah exactly. Alright

46:52

on we go what other learnings have we

46:54

got for these earnings? I just Elmo.

46:57

Just a couple of companies they'll be more

46:59

next week. I would make

47:01

the point you know Microsoft kept warning us and warning us that

47:03

they were gonna have a tough year in 23 and that's

47:06

why they were laying off and that's why they're doing

47:08

the cutbacks and all they've had

47:11

is record year over year. Well that's

47:13

everybody in the tech industry and they've

47:15

already in this month alone 25,000 tech

47:17

jobs up in smoke. That's just

47:20

bizarre. I'm of two minds here so I there

47:23

are people who would hear what you

47:25

just said. See they could

47:27

have afforded to keep paying these people.

47:29

They should never lay those guys off

47:32

and yikes hold on a second. To

47:34

me the real crime here was that they hired

47:37

too many people during an upswing

47:39

that everyone knew was temporary. But the

47:41

way they did those layoffs didn't cull

47:43

the deadwood either. No it culled the

47:45

most people. You know them and I

47:47

knew them. Yeah I know I should

47:49

have. They got lost. Yep yeah

47:52

but you know what all this proves to me

47:54

it look you'll this is something that would never

47:56

occurred to 30 year old Paul but you know

47:59

20 something years later. This

48:02

just shows me the big tech, these companies, these companies

48:04

that we think we know so well, Microsoft,

48:06

Google, whatever, are just like

48:08

any other big company. Just big corporations. They're

48:10

just that stupid. They're just that stupid. Yep.

48:13

They're just that terrible. And I'm also reminded of the Hansman line,

48:15

we are not organized enough to be as evil as you think

48:17

we are. Yes. That was always

48:19

my thing about Microsoft was, you know, back when they were

48:21

the evil empire, it's like, guys, you

48:24

don't understand how disorganized this company is. There's

48:26

no consistency. It's

48:28

a bunch of little fiefdoms of angry people.

48:30

It's not, you know, it's not

48:32

a giant concerted effort to crush people. Yeah,

48:34

with varying degrees of enthusiasm for the next

48:37

promotion. Yeah. So,

48:40

speaking of other companies, there's terrible as Microsoft.

48:43

Alphabet slash Google, net income of 20.7 billion, revenues

48:46

of 86.3 billion. What's

48:50

the number? I always put this in here somewhere. Yeah. 76%

48:54

of their revenues came from what? Google

48:57

Cloud. No, I'm just kidding. Advertising,

48:59

they're terrible. Yeah, yeah. Yeah. Although,

49:02

never going to get past that. Well,

49:04

you know, Google Alphabet, whatever, like Apple, right,

49:06

like Microsoft back in the day when it

49:08

was just Windows, are trying to diversify. And

49:11

they do have two businesses that are going pretty

49:13

strongly. They're still small compared to advertising, but subscriptions,

49:19

platforms, and devices, right? So,

49:21

Pixel and whatever, associate things. 10.5%

49:25

growth, $10.8 billion in the quarter. And Google Rocks is

49:27

the like, it goes under that? Yep.

49:30

And then Google Cloud, which is kind of their, you know,

49:32

their cloud, I guess. That

49:35

stuff's been going pretty well, honestly, $19 billion.

49:38

So, I hope they're

49:40

building in enough infrastructure because they still

49:42

seem very Valley-centric. Yeah. Well,

49:45

so we're talking about $20 billion. I

49:47

mean, just to kind of put those together, right,

49:49

those two things. I mean, more personal computing was

49:51

only 16.9 at Microsoft. Microsoft

49:55

365, productivity and business

49:57

processes, 19.2. So...

50:00

That's not horrible. I'm just saying it's not horrible.

50:03

Compared to the advertising stuff, small. Yeah.

50:06

Because Wall Street, these results were

50:08

not meant favorably. This guy's

50:10

made... I just want to be clear about this. $65.5

50:13

billion in revenue from ads, and Wall Street said, not enough?

50:19

They're just supposed to pay $66 billion. They blew it! Are

50:23

you kidding me? Yeah. This

50:25

world is screwed. That

50:27

is just so mental. It's perverse incentives

50:29

that keep this whole thing churning. That's

50:31

why they laid off people. I mean,

50:33

it's just really... It isn't

50:35

such a... That's just incredible. This stuff blows my

50:37

mind. Yeah. Nuts.

50:40

And

50:42

then we might have talked about

50:44

Intel last week, but I'll just mention it

50:46

quick, because it factors into AMD this week,

50:49

which is that Intel, let's see, last week,

50:51

was... This is for a quarter. It was

50:53

an income of $2.7 billion on revenues of

50:55

$15.4 billion. And

50:58

that was a gain of 10%. It was the first

51:00

time all year that Intel's revenues actually went up year

51:02

over year. And remember at the time, they were saying,

51:05

among other things, like, we're starting to see that PC

51:07

rebound. So this week,

51:09

we got AMD telling a similar

51:12

story, smaller numbers. I

51:15

think a lot of people... You would

51:17

think when Intel is the wounded lion

51:20

stumbling across the savannah, that this younger,

51:22

faster moving is going to overtake... It's not even close.

51:25

Like, AMD, for all of us... Someone

51:27

else puts a paw, knocks them on their

51:29

butts. Yeah. It's much better than AMD. Yeah.

51:31

We're talking... This is $667 million in profits

51:33

on revenues of $6.2 billion. So

51:39

a vastly diminished Intel

51:42

is still almost three times the size of AMD. Like,

51:44

it's... And they're starting to

51:46

turn things around. So... I mean, is the

51:48

number... Other number you want here the TMSC

51:51

numbers? Yeah. Right.

51:53

So I don't know that we'll ever see

51:55

those actually. Well, that's true. We get those.

51:57

I don't have those. But... These

52:00

are companies that come

52:02

from that traditional PC market and they're expanding into

52:04

the data center. I would say,

52:06

again, I bet Intel has a much... Let's look

52:08

it up. Let's see.

52:11

Now I want to find it. AMD's

52:13

data center number was 2.3 billion

52:15

in the quarter. It was up 38%. They're doing

52:18

great, right? Intel, which I

52:20

didn't put into my... No, I said it was

52:22

4 billion. 4

52:25

billion for Intel versus 2.3 for

52:27

AMD. There you go. It was

52:30

basically twice as big, but AMD grew

52:32

38% and data center for Intel down 10%. So

52:38

here you go. Data center is the

52:40

one area where AMD maybe has a

52:42

chance, right? That's

52:45

the bigger business, I mean, ultimately. The

52:49

threat to these companies is not

52:51

just Nvidia or any

52:54

other actual chip maker. It's

52:56

these companies like OpenAI, Microsoft,

52:58

Apple, whatever, Google, they're

53:01

all trying to do their... They're

53:03

trying to kind of rest control away

53:05

from these companies and create

53:07

their own chips. Of course, now

53:09

they're partnering for now, of course, but I think the

53:11

goal is to use the

53:16

fab owners to make their own chips

53:18

and kind of bypass these companies. So

53:20

let's see. It's going to be a

53:22

much more diverse market for

53:24

microprocessors and other chips than

53:27

we've had for 20 years, really. Yeah,

53:30

well, and governments are

53:33

pouring a lot of money into bringing

53:35

manufacturing home because of the threats going

53:38

on in the Southeast. We're

53:40

just going to diversify it

53:42

more and distort profitability. There's

53:45

going to be a lot of... The whole

53:48

motion to get that stuff happening in North

53:50

America again is they're

53:52

heavily subsidized. State-sponsored subsidies? Yeah. Is

53:54

that an accurate term? Well, at

53:56

the same time, I think there's

53:58

a recognition that... You

54:00

make your own chips in your own

54:02

country the same reason that you make

54:04

food for your people and vaccines. Like,

54:06

it is an essential service. It is

54:09

strategically important. And so it doesn't have

54:11

to be efficient. I just want to

54:13

be able to treat an employee of

54:15

Intel the way I would treat like

54:17

a police officer or a mayor and

54:19

say, I pay your salary. But

54:22

if you're looking at TS-17 numbers, like

54:24

they're in the 20 billion quarterly revenue

54:26

range. Like, they're the same size. They

54:29

just don't own any of their chip designs. Right.

54:33

It's a different kind of business, really, right?

54:35

Because before this was like all integrated into

54:37

one company. That's the Intel model. They're still

54:39

trying to do it. Yeah. But

54:42

I would argue more profitable because they are only

54:44

making chips that people pay for. Yeah.

54:47

Right. As opposed to the

54:49

Intel that's running those fabs experimenting with chip

54:51

designs. Right. Yeah. Yeah.

54:56

They're eliminating the biggest

54:58

cost and the biggest risk. Sure. It's

55:01

the foundry model. At the

55:03

same time, it's like this is not where

55:05

innovation is going to come from. It's about

55:07

reducing costs rather than innovation

55:09

making something new. Not

55:11

that either AMD nor Intel has

55:14

made anything profound recently. Wow.

55:17

You don't think that the core alter chips are profound?

55:20

Dun, dun, dun. He

55:23

says leadingly. So sure.

55:25

That's a word. But yeah,

55:28

I mean, obviously these days it's

55:30

about efficiency. So for the fab

55:32

guys, you're looking at smaller and

55:34

smaller processes and Intel, you know,

55:37

Intel's, I don't know enough about hardware

55:39

design to know if this is truly innovative, but

55:41

these kinds of 3D designs that they're working on

55:43

and so forth. Yeah. I mean,

55:45

I would argue the biggest thing that the

55:47

most important thing that TSMC owns is a

55:49

set of skilled engineers in making very small,

55:52

you know, five nanometer chips. And they

55:54

live in a wall that has armed

55:57

guards. Yeah. You know, but

55:59

you know, they're. I know they're building fabs

56:01

in North America. The question is, are they training

56:03

those engineers? Like are they going

56:05

to have people who know how to run those machines

56:07

well enough to get their yields of problems that people

56:09

want? Anyways,

56:13

it's a bad idea. I love the

56:15

hard work about the domestic stuff, but

56:17

we'll see. Well,

56:19

I'm and I'm only pointing out because the earnings

56:22

numbers are going to get harder to read over

56:24

the next few years as this market fragments is

56:26

further and runs under substantial subsidies. For

56:29

the Microsoft guys in the audience, I would just say Microsoft

56:33

used to be the biggest company, the only company

56:35

in personal technology. Now they're an all-sarin, but they're

56:37

the biggest company in the world. So

56:40

there's a bigger pool to

56:42

play with. So I

56:44

think for these companies that meet like

56:46

Intel, for example, dominating their world, struggling

56:50

now, but they could emerge as a not

56:53

the dominant chip maker anymore. They'll be one

56:55

of whatever number. But there's

56:57

a profitable future where maybe potentially I'm not

57:00

saying it's going to happen, but I'm

57:03

sure they're looking at Microsoft and saying, yeah, we want

57:05

that. We also wouldn't mind some regulatory

57:10

ignorance on our

57:12

part. Just stop thinking about us because we're

57:14

not number one anymore. Yeah,

57:17

well, they've definitely played that card a few times. Don't

57:21

look at us. We're the little guy. Yeah,

57:24

a little poor little Intel. We're

57:27

not controlling the market share. I don't know what you're

57:29

worried about. We'll see. Anyway,

57:31

look, we knew what we were. Let us kill

57:33

this competitor by golly. I

57:36

think the constant state of change is what

57:38

keeps things interesting and for people with ADD

57:41

like me, it makes it hard. So we'll

57:45

find balance in here somewhere. All

57:47

right. And that's it for now. I guarantee you next

57:50

week, we're going to have three

57:53

to five more. We hear from Dell

57:55

and HP. So exciting. What about Nvidia?

57:57

We already heard from Nvidia because they're

57:59

the ones. I don't think we have

58:01

this quarter. I think this is not last year, we went up

58:03

700% I think. Something

58:05

like that. Yeah, so by... We were

58:07

in the trillionaire club. Yeah, market cap, they were the biggest...

58:09

Or by... No, I'm sorry. It

58:12

was revenues. By some measure, they were the biggest hardware maker

58:14

in the world last year. They're not really, right? Not by...

58:17

Not objectively, but... They don't even make hardware, do they? Yeah.

58:20

They only... They make their gear. They

58:22

make video cards. What do you mean? Do they?

58:24

Or do they just do reference designs that other

58:27

people make? Oh. Yeah, I

58:29

think they sell the record. They sell their own now? They did

58:31

this at the data center. I'm pretty sure. Yeah. Well,

58:34

I believe so. Well,

58:37

that'll be the fun one. That'll

58:39

be exciting. I like the stragglers. You think you're over it? And

58:41

then you're like, oh, finally. And then they come in and they're

58:43

like, oh, come on. Gotcha again. Come on. Like,

58:46

our quarter ran from April

58:48

17th until... Like,

58:51

what? It's like, why? It's like

58:53

the NBA season. It just keeps getting longer

58:55

and... A little longer, a few more games.

58:58

Exactly. There'll be one

59:00

team starting up for next season that's still playing the

59:02

championship from last year. Exactly.

59:05

Formula ones like that, too. They keep adding

59:08

races. Oh, my God. Right. All

59:10

right. What else? What else

59:13

do you got? You got Windows? You got any

59:15

Windows? I don't know how we do it. We got

59:17

some Windows. Can I use the record? We've given

59:19

the name of the show. It is Windows Weekly. So,

59:21

yeah. Let's do it. Right. Let's

59:24

do it. Why not? Really,

59:26

at this point. It

59:28

seems like... Remember Windows? Remember

59:30

Windows? That was so much

59:32

fun. Now we're all using spatial computing with nerd helmets.

59:35

Yes. Yeah.

59:38

Right. This is more

59:40

like Windows, comma, weekly. So,

59:44

last couple weeks now, we've been getting these insider

59:46

builds, like, after the show. I'm sure that's not

59:48

on purpose, but Thursday,

59:51

Friday, whatever was the best one. Are you sure?

59:53

No, I'm not. I've got Canary, Dev,

59:55

and Beta stuff going on. So, the Canary

59:57

Channel 1 was, to me, the best. the

1:00:00

most interesting and I've been kind of waiting for it to

1:00:02

be interesting. They

1:00:05

were talking, there's a Windows Studio

1:00:07

Effect feature called Voice Clarity, which

1:00:10

I parallel, I didn't know this, but apparently was

1:00:12

Surface Only and he had a very specific Surface

1:00:15

right, one with an MPU, which

1:00:17

they're going to bring to more computers now, basically all computers

1:00:19

with MPUs, I would imagine. Actually, no, I'm sorry. I think

1:00:21

they're going to bring it to all computers. I think it

1:00:23

doesn't require an MPU and they're going

1:00:27

to do it without an MPU. So that's kind of

1:00:29

fun. But the big one to me was

1:00:31

that they're redesigning the first phase

1:00:34

of the Windows Setup process. So if

1:00:36

you know about Windows Setup, I call

1:00:38

the first part of it, which dates

1:00:41

back literally to Windows Vista in some

1:00:43

ways, but honestly beyond that, because it's

1:00:45

really based on the NT Setup from

1:00:47

the 90s. I will call

1:00:49

that the first run experience because I don't really have a name for

1:00:51

it. Most people are familiar with the

1:00:53

out of box experience, which is that graphical thing that everybody

1:00:56

sees. So if you buy a new computer, you fire it

1:00:58

up, Windows logo pops in. That's

1:01:00

the out of box experience. That

1:01:04

changed at the beginning of Windows

1:01:06

11 and it's been updated a few times

1:01:08

since then, but the visual change, the big one came with

1:01:10

Windows 11. So with this

1:01:12

big version of Windows coming this year, whatever it's called,

1:01:15

they're going to change the first phase

1:01:17

of Setup. And I

1:01:19

actually, I ran, I threw it in a VM just to kind of

1:01:21

check it out. And I was like, you know, this

1:01:24

looks awfully familiar. And

1:01:27

the reason it looks familiar is because

1:01:29

it's actually like 10 year old code.

1:01:31

It's the same design

1:01:34

that they use in the Windows 11 installation assistant,

1:01:36

which is something you can download from the, you

1:01:38

know, when you Google download Windows 10, it's the

1:01:40

first choice at the top. It

1:01:43

doesn't look like the stuff that's been in

1:01:45

Windows since, well, Windows 8 really. So

1:01:48

Windows Vista and Windows 7 showed

1:01:51

something that looked like an arrow window over

1:01:53

a colorful backdrop. They styled

1:01:55

it differently between the two systems, but that

1:01:57

thing was actually a bitmap. It

1:01:59

was no real. window there, it was a single image.

1:02:02

And my belief is that because they need this

1:02:04

thing, or needed at the time, this thing to

1:02:06

fit on a DVD, they

1:02:08

had to strip out the bitmaps and they made it kind of

1:02:11

really plain. So starting with Windows 8, it's

1:02:13

just plain purple, but it's an

1:02:15

actual window. And it's drawn

1:02:18

in the least expensive way

1:02:20

possible, if that makes sense. It's probably

1:02:22

literally Charles Petzold's C code with

1:02:25

every window attribute stripped out of it,

1:02:27

so that it's the most basic window imaginable.

1:02:30

It has minimize, restore,

1:02:32

the close buttons, and it has the window button

1:02:34

on the left, and that's it. There's

1:02:36

nothing else going on there. And I think literally it was

1:02:38

done for, like I said, for disk space

1:02:40

purposes. One

1:02:43

of my big tips for Windows is that this process,

1:02:47

this Windows installation media that you create

1:02:50

can also be used to repair Windows. So

1:02:53

instead of creating a recovery drive, you

1:02:55

should just create this installation disk and just put it somewhere.

1:02:57

So if you ever can't put your computer and can't get

1:02:59

into the recovery environment, you

1:03:01

can use this thing to boot the computer and it

1:03:04

works great. But the way

1:03:06

it looked before, it wasn't obvious, the little, there's a

1:03:08

little text thing, it's like one point big and

1:03:10

the bottom is says, hey, you can repair your

1:03:13

computer too. Now it's a

1:03:15

top level option. And I

1:03:18

think what's going to happen, basically, I think they

1:03:20

went back to this older style and they'll

1:03:22

update the language over time, because there's

1:03:24

some weird reversions in here. Like they

1:03:27

actually talk about DVDs. Like if you,

1:03:30

your product key will be found inside the box where

1:03:32

your DVD was. It's like, what are you talking about?

1:03:36

Yeah, it's like, it's crazy, right? But

1:03:38

it's kind of interesting. And I think, I don't know

1:03:40

if they still have that same arbitrary size limit, whatever

1:03:42

a DVD was, 4.7 gigabytes, I think, if

1:03:47

that's a thing. But I know

1:03:49

that the actual size of the Windows

1:03:53

setup, well, it varies

1:03:55

by version, but I think you need like a,

1:03:57

it's an eight or 16 gig USB. drive

1:04:00

to make this thing. So I

1:04:03

don't know what they're doing exactly, but I'm just

1:04:05

fascinated. I document this for the book. Obviously, I

1:04:07

run through this all the time. I see this

1:04:09

stuff not every day, but every

1:04:11

week for sure. And the fact that they're actually

1:04:13

touching something this low level in Windows right now is

1:04:17

very interesting to me.

1:04:20

So that's Canary. And

1:04:22

then yeah, the dev stuff just

1:04:24

might have bug fixes. Nothing

1:04:26

really worth talking about there. But, beta

1:04:29

channel, there's some big news, right? So

1:04:32

same thing with the Windows Studio effect

1:04:34

coming there. They're doing snap layout suggestions.

1:04:36

So they'll look at the windows that

1:04:38

are on your... I'm sure it's AI

1:04:40

powered, it has to be, right? Look

1:04:42

at the windows on screen and like

1:04:44

suggest layouts that make sense for those

1:04:46

applications, which you know, we'll see how good that is. But

1:04:49

the biggest news addresses a long time

1:04:51

complaint in the Windows Insider program, and

1:04:53

I'm hoping and assuming it's going to

1:04:55

come to all the channels, which is

1:04:57

that they will let you un-enroll a

1:04:59

PC from the beta channel

1:05:02

on the fly. You don't have to wait for some future

1:05:04

milestone. You can just check a box, it

1:05:06

will reboot, it will install

1:05:08

the stable version of Windows. You

1:05:10

will lose obviously features that are not there because you

1:05:12

know, it's stable, doesn't have all the features. But you

1:05:14

can actually just go back. You don't have to wipe

1:05:17

out the machine. So I think

1:05:19

that's smart. I think that's the way it should have always

1:05:21

been. By the way,

1:05:23

that's the way Android works. If you test Android betas,

1:05:25

you could just, you know, I mean, I think

1:05:28

iOS probably does the same thing. It's, you

1:05:30

know, there's a nice separation there. It doesn't always work,

1:05:32

I guess. But I mean, the ability to separate

1:05:35

your data and apps and whatever from the system and

1:05:37

just kind of revert to a stable version of the

1:05:39

operating system to me just makes sense. So yeah,

1:05:42

I believe this is a good sign. Well,

1:05:47

and it just be, I mean, when I'm

1:05:50

getting from that, it's like, maybe you were right, Canary will

1:05:52

be 12. Like more than

1:05:54

ever. It's yeah, I really I hope

1:05:56

so. But also the rollback for

1:06:00

beta sort of speaks to 11 is

1:06:02

coming to an end. And so

1:06:04

they're now they're baking changes in a way that are

1:06:06

easy to recover. Right. I

1:06:08

linked to the wrong article for this next

1:06:10

thing, but I will correct that. Um,

1:06:13

our home arm thing. Yeah. So

1:06:16

there have, there are a few, uh, uh, I'm

1:06:18

sorry, a few web browsers that run natively on

1:06:20

windows on RM. I think Firefox is one and

1:06:23

I feel like some of the chromium. Browsers

1:06:26

including edge obviously, uh, are native, but

1:06:28

Chrome to date has remained, you know, X 86. And

1:06:31

so back when windows and RM first

1:06:33

came out, you would run, you would, you'd have to go

1:06:35

manually go find the 32 bit version,

1:06:37

right? Right. Because that was a,

1:06:39

the only one that was compatible. And then for

1:06:42

a while when you could do either, it was actually

1:06:44

the more efficient version, but I think in

1:06:46

windows on RM today, I believe if you just go get it,

1:06:48

you get the 64 bit version, we'd have

1:06:50

that emulation and we don't run 32 bit code

1:06:53

anymore, so that's the one you're going to run, that's what you get.

1:06:55

Um, but they just released to their Canary channel.

1:06:59

The first build of Chrome for, uh, for

1:07:02

windows and RM. So I downloaded it and checked it

1:07:04

as nothing traumatic going on there. It's not like you

1:07:07

all of a sudden everything works faster and better

1:07:09

and whatever, but it is a native version that

1:07:11

is important. I don't know why they're doing it

1:07:13

now, but maybe this is one of the,

1:07:15

you know, many indications that, uh, this

1:07:18

will be the year, I guess we'll see. Yeah.

1:07:21

Well, and I just wonder if it's because Microsoft,

1:07:23

they didn't want Microsoft to just take that market.

1:07:26

Yeah. We've got to build and it's not that hard to

1:07:28

make it. It can't be

1:07:30

Microsoft's doing it. No, I'm sorry. I other

1:07:32

people are doing it. I mean, so, you

1:07:34

know, if, if people, if companies building, uh,

1:07:37

chromium based web browsers can do it, of course, Google can

1:07:39

do it right. So yeah. So

1:07:42

that's good. Um, put it in turn on it.

1:07:44

You got to build out. Exactly. Right.

1:07:46

Just so if you get this to compile, we'll put

1:07:48

it in canary. We'll call it good. Um,

1:07:52

Microsoft edge is I'm clicking.

1:07:55

I'm using this, the wrong links on everything. Yeah,

1:07:57

I know you're doing a great job. I'm doing

1:07:59

good. spend that kind of a week. So

1:08:01

this week, this has been going on

1:08:03

for a long time. I don't know why this is in the news right

1:08:06

now, but there

1:08:09

is a very good chance that what people don't

1:08:12

understand is that something's happening behind the scenes that

1:08:15

they agree to. Because one of

1:08:17

the things, when I started writing the Windows 11 field

1:08:20

guide, I got to the Edge chapters and

1:08:22

I realized there's a lot of cannery

1:08:25

going on here, right? When you first bring

1:08:27

up Edge, you go through these three screens

1:08:29

where you want all your stuff on all

1:08:31

your computers. You're like, yep. You're like, do

1:08:33

you want to import your stuff from Chrome? Yes or no. That's

1:08:36

up to you. But to me,

1:08:38

that's a one-time deal. You do

1:08:40

it once and then you use the new browser, right?

1:08:42

That to me is the point of that. And then

1:08:44

the third screen is like, hey, you want to make

1:08:46

your web experience better. And if you actually look at

1:08:48

the fine print, what you're actually agreeing to is a

1:08:50

lot more tracking. And I think

1:08:53

what Microsoft is doing here is commingling this

1:08:56

notion of we're always, you said yes to

1:08:58

importing stuff from Chrome. You

1:09:01

also said yes to always keeping your thing up to date.

1:09:04

So we noticed you have Chrome on your computer. We're going to

1:09:06

make sure you're always up to date.

1:09:08

And they're starting to do it in new ways to some

1:09:10

people on some computers. This is actually, like I said, it's

1:09:12

gone on for a little while, but the idea is that

1:09:14

you are using Edge and

1:09:16

then you can access tabs that

1:09:19

you would only open in

1:09:21

Chrome. Right in your history. And it's like,

1:09:23

wait, what? So the

1:09:26

issue here, as it is so often the case

1:09:28

with Edge, is that people are like, I didn't

1:09:30

agree to this. Yeah.

1:09:32

Oh, yeah, you did. You just didn't know

1:09:34

what you were agreeing to. Yeah.

1:09:39

The version says that this started after installing some new

1:09:41

update for Windows 11. But you can look this one

1:09:43

up. People have complained about

1:09:46

this for a little while. So I'm not really sure what to say to

1:09:48

this. Other than that, you shouldn't

1:09:50

use either one of these browsers, you idiots. And,

1:09:52

you know, think about it.

1:09:54

What were you thinking? What

1:09:56

are you doing? So I

1:09:58

don't know what's happening there. But anyway. I have not

1:10:00

experienced this and because I don't you know, I would never

1:10:04

Speaking of which this new version Microsoft

1:10:06

Edge last week We

1:10:08

talked about various web browsers. They're

1:10:10

all in the same schedule now, right? Basically. Yeah this

1:10:13

one is only interesting because Microsoft

1:10:16

Edge is going to be used in these managed environments

1:10:18

We have a business and one of the promises I

1:10:20

think it dates back to 20 when they were talking

1:10:22

about what? You know 23 h2

1:10:24

or whatever was that? they

1:10:28

They have kind of a new work experience,

1:10:30

right? That's it's really just profiles with a

1:10:33

different name But they were promising that they

1:10:35

were going to let businesses using enter ID

1:10:37

brand the browser So you could

1:10:39

have like a logo up in the corner? So it's like you

1:10:41

work for throughout comm so you get a little T logo up

1:10:44

there or whatever right that

1:10:46

is finally available so they

1:10:49

have links to the Microsoft

1:10:51

Learn website where you can as a business you

1:10:53

can learn what policies you have to implement what

1:10:55

assets you need so that these things are delivered

1:10:57

down to your users and That

1:11:00

happens and then for for normal human beings

1:11:03

They're changing the way the browser alerts

1:11:05

users about updates like browser updates because

1:11:07

now these things are updated Every

1:11:10

10 seconds. It seems like it's actually I think it's

1:11:12

every four weeks technically now, but Before

1:11:16

if you want it if you wanted to manually find

1:11:18

a browser update you would go into Settings

1:11:21

app like the about interface essentially and it was a oh

1:11:23

this new version It just starts downloading it and I suppose

1:11:25

if you waited long enough and must do something I must

1:11:28

put something up at the corner where it says a you're

1:11:30

out of date Microsoft

1:11:32

Edge has this unique little interface called

1:11:34

browser essentials, which hasn't been too essential

1:11:36

to date honestly But it's getting kind

1:11:38

of interesting and if you ever look

1:11:40

at that in fact, let me just bring it now so I can

1:11:43

see What's in there exactly? this

1:11:45

is where you access things like the

1:11:50

Call the the VPN service that they have is

1:11:52

one of the things that's in there There's

1:11:55

some power and efficiency stuff in there some safety

1:11:57

stuff, which is nonsense. They don't do anything for

1:11:59

you Yeah, Edge Secure Network is the name of the

1:12:01

VPN. So you can do that kind of stuff. I

1:12:04

actually saw for the first time in my life, because I don't

1:12:07

use Edge a lot. I use it mostly just when I'm writing

1:12:09

the book or whatever. But it actually

1:12:11

complained that some of my tabs were taking up

1:12:13

too much memory. Wow. I was like,

1:12:15

oh, look at you. And

1:12:17

so it made some recommend. And I don't use

1:12:20

sleeping tabs. That might have been part of the

1:12:22

problem, you know, whatever. But they're going to start

1:12:24

promoting Edge software updates in this interface. It should

1:12:26

really be telling you how long you've had that

1:12:28

tab open too, right? Yeah. Well,

1:12:31

things like we just talked about Arc,

1:12:33

right? It could just be like, you know what? We're just

1:12:35

turning it off. Yeah. You know, you're

1:12:37

not using this thing, right? Yeah.

1:12:41

I know folks who leave browser sessions

1:12:43

open for days and they leak memory.

1:12:46

Like, they just get worse and worse and worse

1:12:48

and worse. Right. Right.

1:12:51

Yeah. So I mean, memory leak is even

1:12:53

when you close the old pages, the memory doesn't get better. Since you

1:12:55

close all of them, that

1:12:57

whole thing gets junked in. When you reload, you come

1:12:59

in much lower footprint. It's always a double edge server

1:13:01

with Edge because you look at a feature like this

1:13:04

and you think, yeah, I mean, this is logical. It

1:13:06

makes sense. It's helpful, you know, whatever. But it's also

1:13:08

one of like a thousand of these features. And

1:13:10

that's the problem with Edge is there's too much of this stuff, you

1:13:12

know. Just I'm probably never going

1:13:14

to write this article. But if you just look at like

1:13:17

screenshots of Edge, you'll notice like the UI is always in different

1:13:19

places. You're like, what's going on? Let's move it around. You can

1:13:21

figure it out with the hell you want. Not only do they

1:13:23

move it around, but you could go up to the corner and

1:13:26

say, like, I want my profile button up there. No, I want

1:13:28

it down here. I want the workspaces

1:13:30

icon there. No, no, I don't want it there.

1:13:32

Like it's different all the time. And it, you

1:13:34

know, that's the new Microsoft way. And

1:13:39

then I have not seen this myself,

1:13:41

but apparently today they started rolling out

1:13:43

a redesigned version of OneDrive for the

1:13:45

web for consumers. Right. So

1:13:48

onedrive.com, you can see this. And

1:13:50

this is in some ways, it's

1:13:53

kind of similar to what actually you see in OneDrive for

1:13:55

Business. You get this kind of like,

1:13:57

I think they call it for you section up in

1:13:59

the. top and they're trying to anticipate

1:14:04

what it is you're looking for and it's I kind

1:14:07

of wish they wouldn't honestly I when I go to

1:14:09

a site like this if I go to one drive

1:14:11

calm it's very specific I just want

1:14:13

to get into the file system finest specific thing get

1:14:15

the hell out of there and they're

1:14:17

looking at it more of a destination so

1:14:19

it kind of joins yeah start menu in

1:14:21

Windows 11 the Microsoft 365 app

1:14:23

and Windows 11 you know office.com

1:14:27

it's it's you know what

1:14:29

is it what are you doing here like what's your

1:14:31

point and it's like it's trying to do the Facebook

1:14:33

hey here's a picture from last year aren't you excited

1:14:35

haven't I helped you it's like interrupting

1:14:37

me again get it out of the way yeah

1:14:39

exactly I right I didn't come here for yeah

1:14:42

for helpful suggestions I came here to get something

1:14:44

done I had some stuff to do and you're

1:14:46

interrupting me and

1:14:49

then I just threw this under Microsoft 365 even

1:14:51

though we don't have any other stuff but I

1:14:54

think it was Friday Friday the teams

1:14:56

outage teams went out oh yeah like

1:14:58

eight hours right yeah

1:15:02

it was like a conga line online of

1:15:05

people who are like oh my god this

1:15:07

is so nice great yeah nobody can bother

1:15:09

me now you know yeah but

1:15:12

much like that Microsoft hack

1:15:14

from a week or so ago I'm curious

1:15:17

about what happened here right

1:15:19

it's most likely a human-caused

1:15:22

configuration era Microsoft called it

1:15:24

a networking issue at

1:15:26

one point they never really

1:15:28

and if really explained what

1:15:30

I really explained it and and they also when

1:15:33

I went I think it was Saturday morning or

1:15:35

even as late as Saturday afternoon when I looked

1:15:37

at the admin center it

1:15:40

still told me they were looking into several

1:15:42

of these issues but Microsoft was publicly reporting

1:15:44

they solved the problem everything was fine so

1:15:46

it's kind of hard to say but this cascaded

1:15:49

across the entire planet mm-hmm

1:15:53

and they I guess they fixed it it

1:15:56

seems to work to you know work Monday so it's early it

1:15:59

I don't know but I'm confused

1:16:02

about what happened

1:16:04

there and I think I'm going to continue to be confused

1:16:06

because I don't see them ever coming clean about this. They

1:16:08

didn't say anything about nation states or anything like that. It

1:16:10

was just like, yeah,

1:16:14

you know, sometimes Pitsar forgoes bad. Did

1:16:18

you, I don't know if you listened

1:16:20

or saw Steve Gibson's piece

1:16:22

yesterday. He was quoting Alex Stamos

1:16:25

on the Microsoft break. Alex wrote a

1:16:27

piece on it. Not John

1:16:29

Stamos from the. Not John

1:16:31

Stamos. Alex Stamos who.

1:16:33

Paul House? Yeah. No,

1:16:35

Alex is very well known security researcher. He's now

1:16:38

at the Sentinel One, but before that he was

1:16:40

at Stanford's Internet Observatory and you

1:16:42

remember that Zoom brought him in when

1:16:44

they had some embarrassment in

1:16:47

security. Anyway, Stamos really reamed

1:16:49

Microsoft on this email thing.

1:16:51

He said this is not

1:16:53

an issue of, as

1:16:55

we might have thought, the bad

1:16:58

actors getting an email account.

1:17:00

This is far worse. Furthermore, he

1:17:03

pointed out that at least 10 other

1:17:05

companies seem to report this, that this

1:17:07

OAuth failure reached

1:17:10

them as well, right? Yeah,

1:17:12

actually since we talked, there was a second

1:17:14

and then a third update to the story

1:17:16

from Microsoft. In the second update, Microsoft said

1:17:19

that they discovered there were 10 other companies

1:17:22

that had been hacked using the same technique

1:17:24

and they alerted them. That

1:17:26

was the same day that HPE came out and said, hey,

1:17:28

by the way, this happened to us as well. And

1:17:34

the third one, I think the one where

1:17:36

they basically said, yeah, we didn't configure 2FA

1:17:38

on this account. Basically, it was like that

1:17:40

stupid and it's like, it's a couple of,

1:17:42

you know, I don't know.

1:17:44

And my suggestion was it was an internal

1:17:46

OLE account that didn't bother and then somebody

1:17:48

made it public some way and it

1:17:51

hadn't been locked down properly. shows

1:18:00

up, opens a test account, he's got to do

1:18:02

a test VM, whatever. And

1:18:04

I have to do something with it, whatever it might be. And then,

1:18:06

hey Bob, you want to go to lunch? Yep. And

1:18:09

then they take off and then he goes to a different company or different part of

1:18:11

the company. And it's just one

1:18:13

of many kind of ghost or VMs or

1:18:15

accounts or whatever they are out in the world. And I

1:18:17

don't, you know, there's a

1:18:20

version of this where you could kind of

1:18:22

make the argument that Microsoft has these built-in

1:18:24

tools for assessing things and they, maybe

1:18:27

the fact that this is going to

1:18:29

be an unpopular position, I'm not saying

1:18:31

it's mine, but maybe they found it quicker

1:18:33

than basically any other company would have. I mean,

1:18:35

given the complexity of their environments and all the

1:18:37

machines and users and whatever, I mean, and you

1:18:40

know, people like us will be like, how could this happen

1:18:42

to a company like Microsoft? We trust them for

1:18:44

our security, you know, it's easy to get really, you

1:18:47

know, outraged over everything these days. And

1:18:50

generally speaking, their customer-facing stuff is pretty

1:18:52

damn good. That's not what this is.

1:18:55

That's right. That's exactly right. So

1:18:59

I think the one thing we've said all along, we said

1:19:01

this last week, I'm saying it right now, we'll say it

1:19:03

again in the future, is like, I don't, I think there's

1:19:05

more to this story. And

1:19:07

maybe Alex Deimos has some information about that.

1:19:09

You know, maybe there's more to come. I

1:19:11

don't know. I, it feels

1:19:14

a little, I think

1:19:16

the thing that bugs, the one thing I, in the back of

1:19:18

my brain, not being a security expert, but the thing that bugs

1:19:20

me is that they were

1:19:22

in there for so long. Yeah,

1:19:24

it took as long to detect it as it did. And

1:19:27

I think our company sells products for rapid

1:19:29

detection of breaches. That's a little alarming.

1:19:32

Yeah. Now, we are on the cusp of

1:19:34

this AI era and Microsoft is about to

1:19:36

tout someday in the near future. You

1:19:39

were supposed to detect these guys without a machine

1:19:41

learning model. I know. I

1:19:43

know. Right. That's the

1:19:46

reality. Somebody from Russia logged into

1:19:48

an internal test account. That should

1:19:50

be a flag. Deimos was on

1:19:52

CNBC on Friday night. He

1:19:56

says that he believes

1:19:58

that he's a human being. believes it was

1:20:00

flaws in Entra, Active

1:20:02

Directory. And

1:20:05

Microsoft 365, quoting

1:20:08

Alex Stamos, Microsoft's language here plays this

1:20:10

up as a big favor. They're doing

1:20:13

the ecosystem by sharing their extensive knowledge

1:20:15

of Midnight Blizzard, when in fact what

1:20:17

they're announcing is that this breach has

1:20:19

affected multiple tenants of their cloud products.

1:20:22

I mean, it's not

1:20:24

what they said. Joseph, well, Joseph Mann

1:20:26

in the Washington Post has several sources

1:20:28

indicating at least 10 companies were breached

1:20:30

through Entra. Oh, you

1:20:32

think, oh, oh, oh, that's interesting. Okay, so in other

1:20:34

words, it's not that this hacker group used the same

1:20:37

technique to attack all these other guys. No. It's

1:20:39

that they were able to do it within Microsoft's infrastructure.

1:20:42

That's famous. Oh, that's

1:20:44

interesting. Okay. He says, calling

1:20:46

this a legacy tenant is a dodge. The system

1:20:49

is clearly configured to allow for production access. As

1:20:51

of a couple of weeks ago, Microsoft has an obligation

1:20:53

to secure their legacy products and

1:20:56

tenants just as well as the ones

1:20:58

provisioned today. It's not clear why they made my legacy.

1:21:02

Microsoft does, however, offer us some solutions.

1:21:06

They upsell us. He calls

1:21:08

it the cybersecurity chutzpah hall of fame.

1:21:11

Microsoft recommends potential victims of this attack

1:21:13

against their cloud hosted infrastructure. Why

1:21:16

Entra ID protection or Microsoft Purview

1:21:18

audit or Microsoft password

1:21:21

protection for active directory?

1:21:24

Yeah, this is the school hard, you're at bully

1:21:26

tactic. This is what Microsoft, you know, remember when

1:21:28

Microsoft used to sell antivirus. Let me get straight.

1:21:31

You built an operating system that has vulnerabilities and to fix

1:21:33

those, what you're going to do is charge me to

1:21:37

buy other software that fixes this, the

1:21:39

vulnerability. They also turned around and did

1:21:41

give it away in the end. But

1:21:43

I've had the argument about. It took

1:21:45

a lot of pushback. Yeah, I've had

1:21:47

the argument with Microsoft on run as

1:21:49

about the why do you charge for

1:21:51

traditional security? And they said, listen, the

1:21:54

line gets crossed when we're paying people

1:21:56

to watch out for your stuff.

1:22:00

have to pay for. You know,

1:22:02

you get all the software stuff that's included

1:22:05

with every account when it's

1:22:07

actually active monitoring, that's

1:22:09

people that cost money and you pay

1:22:11

monthly for that. Microsoft should pay for

1:22:13

that service itself then because maybe those

1:22:16

guys would have found that. They didn't,

1:22:18

you know, that stuff's expensive, why would

1:22:20

they? Right. Yeah, I mean I'm

1:22:22

wasting, I'm not going to disagree with

1:22:25

them that there's more to this than

1:22:27

meets the eye. There's not even, there's

1:22:29

no evidence that there's an exploit here. I thought

1:22:31

I was cynical, I got to tell you that

1:22:33

stuff you just read, I was like yikes. Oh

1:22:35

it gets worse, can I tell you? It's brutal.

1:22:39

He says 21 years after the trustworthy

1:22:41

computing memo, it's once again time for

1:22:43

some soul searching in Redmond. Oh

1:22:45

god, what the fuck? Get off of that

1:22:48

so much. I should also point out Alex

1:22:50

now works for a company that sells its

1:22:52

own security products at Mill 1. That's it.

1:22:54

So, it just seemed to be 20 years

1:22:56

after the trust cut. What? Dude,

1:23:00

jeez. I mean there is

1:23:02

an argument for it. Drink and relax. You

1:23:04

know. There's also a glass

1:23:06

houses thing here where laws... Be careful

1:23:09

what you, be careful what you...

1:23:11

Well, I will say that the notion that,

1:23:13

you know, Microsoft did say we found other

1:23:15

companies that were being hacked the same way,

1:23:17

I mean, how would they have known that?

1:23:19

How would they have done that? What do

1:23:21

they know? So that is interesting, I didn't

1:23:23

make that leap myself, I will say that, so

1:23:25

that's kind of interesting. Yeah.

1:23:29

Okay, in other words, yeah, we're

1:23:31

all hosting on the same infrastructure,

1:23:33

there's a bug in that infrastructure

1:23:35

that allowed this. He said Azure

1:23:37

AD is overly complex, lacks a

1:23:39

UX that allows for administrators to

1:23:41

easily understand the web of security

1:23:43

relationships and dependencies that attackers are

1:23:45

becoming accustomed to exploiting.

1:23:47

And in many organizations... I don't think

1:23:49

anyone would argue with that. Yeah. That's

1:23:52

true. In many organizations, Azure AD is

1:23:54

deployed in hybrid mode, which combines the

1:23:56

vulnerability of cloud and on-prem. I just

1:23:58

want to be clear. That is

1:24:00

not how Microsoft markets that product. Anyway,

1:24:04

it's worth a read. Take

1:24:08

it with a grain of salt. He's certainly a

1:24:11

little alarmist. It is

1:24:13

a little extreme, but still,

1:24:16

that's an interesting point. We'll

1:24:20

get to the Taylor Swift deepfakes that you've

1:24:22

been waiting for in just a moment. Paul.

1:24:25

Yeah, I'm going to post actually three or five

1:24:27

of my favorite ones. You

1:24:29

know, as

1:24:32

purely as research, you can

1:24:34

literally search Google and

1:24:36

we will deliver them to you. What would see

1:24:39

Twitter is like, well, we're going

1:24:41

to take them down. We're going to hide the

1:24:43

searches. There's this thing called Google. We call this

1:24:45

the Pete Townsend defense, which

1:24:48

was research. Yeah,

1:24:50

it was just research, Your Honor. Well,

1:24:52

no, I was just curious if Twitter taking it

1:24:55

down had any impact and obviously it does not.

1:24:58

Well, personally, it only took it down for like 24 hours. Yeah.

1:25:01

Well, and they didn't take it down. What they did

1:25:03

was just block any searches for Taylor Swift. Yeah, and

1:25:05

all that. All I don't have to do, they don't

1:25:07

have a department that could take it down. That's the

1:25:09

problem. A very sophisticated kind of a thing anyway. They

1:25:11

just put her head on somebody else's body. It's not,

1:25:14

it's not anyway. So

1:25:16

we don't have to talk about that, but we will talk about

1:25:19

deepfakes when we come back. But first, oh,

1:25:22

do you have, do you have somebody

1:25:24

bringing you some whiskey, Richard? No, no, no,

1:25:26

the whiskey's right here. I'm good. Okay.

1:25:30

I can divert, divert attention from you for

1:25:32

a moment. As I tell

1:25:34

everybody about Club Twit, we're very proud of

1:25:36

Club Twit. We started this two years ago and

1:25:39

I would say right now the most involved,

1:25:42

most discerning, most

1:25:44

active members of our community have become members. More

1:25:47

than 10,000 strong and we're really thrilled about that.

1:25:50

And it's come just in the nick of time.

1:25:52

I don't know if you've heard, but many podcast

1:25:54

networks are out of business now. Many podcasts have

1:25:56

shuttered their doors because ad revenue

1:25:59

has declined so dramatically. It's all going to

1:26:01

Google. It's all going to YouTube.

1:26:03

It's all going to Facebook. It's all going to

1:26:05

influencers But we think we

1:26:07

still have a job to do I

1:26:09

think we have a very important job to do and maybe

1:26:11

it was a mistake way back when when I said, you

1:26:13

know We should let the advertisers support this. I liked it

1:26:16

because it made it free And

1:26:19

we were kind of committed to continue to make our

1:26:21

content free, but we would like to do it with your

1:26:23

help I really want our

1:26:25

listeners and viewers to support us by joining

1:26:28

the club Would you consider it's

1:26:30

seven bucks a month? So

1:26:32

and you can give more you can even do

1:26:34

less if you just want this show ad-free That's

1:26:36

two dollars ninety nine cents a month So you

1:26:38

can get individual shows if you want the seven

1:26:40

dollars gets you ad free of everything gets your

1:26:43

shows We don't we actually do have behind the

1:26:45

paywall in the club IOS today

1:26:47

hands on windows with Paul hands on Matt, which

1:26:49

is by the way great Paul you're doing a

1:26:51

great job with that I love it hands

1:26:53

on it's kind of like the the

1:26:56

premium content on the rot.com It's like

1:26:58

it goes a little deeper a little

1:27:00

extra same thing with Micah Sargent hands

1:27:02

on windows the inside the ultimate

1:27:04

What is it untitled Linux show? The

1:27:08

we can't afford a title, you know, that's

1:27:10

the problem We

1:27:13

also have home theater geeks Those

1:27:16

are all club exclusives. There's other stuff

1:27:18

on the twit plus feed you

1:27:20

get the video before and after every show

1:27:22

Anyway, we try to give you some benefits.

1:27:25

But really the real benefit is you're

1:27:27

helping this network continue

1:27:30

Because we think the job we're doing is important if you

1:27:32

would like to help I would just want to invite you

1:27:35

all We'd love to have you in the club twit.tv Club

1:27:39

twit enough said not gonna

1:27:41

not gonna belabor the point Rich

1:27:44

has got his whiskey. I don't know

1:27:46

what Paul's got nice tall cool. Glad I

1:27:48

don't need to go whiskey Yeah Let's

1:27:51

talk deepfakes Just

1:27:54

briefly because I I'm curious What

1:27:57

people's reactions are when they hear something like an

1:28:00

this case Microsoft, because

1:28:02

of all the stuff that's been going on lately

1:28:04

says, you know, we're going to add deep fake

1:28:06

guardrails to our designer AI. This is the thing

1:28:08

that used to be a image

1:28:10

creator from Bing, right? Because we're not using the Bing

1:28:12

name anyway. So

1:28:15

people can't use it to make porn. What's

1:28:17

the first takeaway from that statement? You

1:28:20

mean you could? Right.

1:28:22

I mean, I could have been using it for

1:28:24

this all. You allowed people to make porn with

1:28:26

this before. And now you're like, you know what?

1:28:30

You're kidding me. That's crazy.

1:28:33

So for whatever it's worth, Microsoft

1:28:35

designer couldn't care less. This is kind of like

1:28:37

their Canva thing. But what they're really talking about

1:28:40

here is that image creator thing, right? So it's

1:28:42

built into Microsoft Paint. It's built into Bing.

1:28:44

It's part of, you know, it's from Copilot.

1:28:46

It's from Dali, right? From OpenAI. It's gotten

1:28:49

really good. If

1:28:51

you pay for Copilot Pro like I do, it's a

1:28:53

little faster, I guess, in certain, you know, at certain

1:28:55

times of the day or something like that. I don't

1:28:57

know. But the results are fantastic. I

1:28:59

didn't know I could be using this to make high quality porn, but

1:29:01

now I guess I can't. So I got you. I

1:29:04

was too late to make it. People want to know that, really. Now

1:29:07

what do you use it for? Mostly

1:29:09

for promo graphics, my articles. I had a great

1:29:11

one where I was like, I asked

1:29:14

it to put the Microsoft campus in the middle of

1:29:16

a scene from the Lord of the Rings, which is

1:29:18

beautiful. It's a little Gandalf

1:29:21

standing around. It was beautiful. You

1:29:24

know, stuff like that. Useful things. Right.

1:29:27

Things that will make the world better. Anyway,

1:29:30

so there was a

1:29:32

story, one of those sources say type

1:29:34

stories a couple of weeks ago that

1:29:36

the DOJ and the FTC were kind

1:29:38

of fighting or debating which one of

1:29:40

them would get to investigate the Microsoft

1:29:42

open AI partnership. We now know

1:29:45

that the FTC won that battle. And

1:29:47

it turns out the reason is they're

1:29:49

actually investigating a lot of, well, several

1:29:51

big tech, big

1:29:53

tech slash AI partnerships

1:29:56

to understand the business model, the

1:29:58

goal, what they're doing. You know, Microsoft, I

1:30:01

think, is the most troubling because

1:30:03

there's this notion that it's

1:30:05

sort of acquisition, not acquisition,

1:30:07

and they're, you know, skirting

1:30:09

around some legal requirements and,

1:30:12

of course, some regulatory action that would have happened

1:30:14

if they ever tried to do that. But they're

1:30:16

also looking at Amazon and

1:30:18

Alphabet, both of whom

1:30:21

have certain relationships with

1:30:23

Anthropic, which is probably,

1:30:25

I guess, open AI's biggest competitor, I

1:30:27

suppose. So

1:30:29

yeah, they're just, and, you know, the EU is doing

1:30:31

the same. I think the UK, CMA, is also doing

1:30:33

the same. They're looking at these companies and like, okay,

1:30:36

so what, tell us a little about yourselves. I

1:30:38

don't understand why the DOJ was ever involved. Like,

1:30:41

you don't, DOJ only says that there's a criminal

1:30:43

complaint. Yeah, and maybe

1:30:45

that was the argument. Like, knowing the DOJ

1:30:47

that we have today, they probably were like,

1:30:49

you know, yeah, let's just bring them to

1:30:51

court. I'm sure that

1:30:53

was the... It seems like

1:30:55

they got a lot going on right now

1:30:57

anyway, so... It never has an entity been

1:31:00

so wrong about so many things that it

1:31:02

would ever prevent them from trying and trying

1:31:04

again. So

1:31:06

I don't know, you know, whatever. God love

1:31:08

them, I guess. Now, look, I thought the

1:31:11

open AI, Microsoft relationship deserved scrutiny.

1:31:14

Yes. Does it mean there's criminality

1:31:16

there? Does it mean there's non-competitiveness?

1:31:18

But it's an unusual relationship and

1:31:21

it deserves scrutiny. And

1:31:23

the upside being, if they find nothing

1:31:25

wrong with that, that's a serious indicator

1:31:27

too. It says, okay,

1:31:29

well, these models then seem to be acceptable,

1:31:31

but they did build a unique model in

1:31:33

that relationship and it should be scrutinized. Yep.

1:31:38

Yeah, Dolly,

1:31:41

Midnight Journey, whatever, all these

1:31:43

image creation... When I say

1:31:46

Midnight? What did I say? Midnight

1:31:48

Journey. Midnight Journey. I think that was a TV show

1:31:50

in the 70s. And

1:31:53

yeah, I got a Taco Bell reference in there somewhere,

1:31:55

we'll let it go. Drugs

1:31:58

were definitely involved. It

1:32:01

is all happening now. It's all you know, that's

1:32:03

all kind of amazing Obviously video is the the

1:32:06

final frontier here We're starting to see some interesting

1:32:08

up there like Google showed off a little a

1:32:10

very short clips of some of the kind of

1:32:12

AI Video stuff that they're doing we know there

1:32:14

are Services that

1:32:16

are gonna upscale video games right to

1:32:19

4k from you know SD

1:32:21

quality and and some of that looks

1:32:23

fantastic And now Nvidia has a service

1:32:26

that can convert SDR

1:32:28

videos into HDR right

1:32:30

Wow AI and their special

1:32:32

chipset. So the most is that past

1:32:34

the speckling Yeah We

1:32:37

live in interesting times. I mean there's no doubt about it Now

1:32:41

definitely what it's real. Yeah, that's

1:32:43

happening and Actually, that's

1:32:45

it. So then okay, so we can

1:32:47

return once again to Xbox because that

1:32:49

now is all we ever talk about

1:32:54

So we don't we didn't we haven't

1:32:56

talked about Apple's non-compliance compliance with the

1:32:58

EU DMA. That's this is a very

1:33:01

controversial and big topic out in

1:33:03

the broader tech world today a

1:33:06

lot of people complaining about that stuff

1:33:09

but Right in the middle

1:33:11

of all this Apple like

1:33:13

other companies and that you know allows the list of things

1:33:16

They're gonna change in the EU but less

1:33:18

well Documented they're

1:33:21

actually kind of changing a few things

1:33:23

just worldwide Right and one of those

1:33:25

things is they're gonna allow that thing they wouldn't let Microsoft do

1:33:27

I think it was two or three years ago now and Bring

1:33:30

Xbox cloud gaming or

1:33:32

game a game streaming app

1:33:34

to the store Remember Microsoft tried to do

1:33:36

that back. It was still called project X

1:33:38

project X So the name that

1:33:41

sounds wrong now that I said it project X. I think it

1:33:43

was project X Whatever it was

1:33:45

called They're actually

1:33:47

gonna love us now So Nvidia has GeForce now

1:33:49

Microsoft obviously has a thing there is if stadia

1:33:51

was still a thing this would have been included

1:33:53

but they've done a complete

1:33:55

about face on this and I Don't

1:33:57

think it's like out of the goodness of their heart I

1:34:01

think this is to lighten the

1:34:03

regulatory scrutiny that they're

1:34:05

getting right now because there is no. Version

1:34:09

of this blocking of this type project x

1:34:11

cloud excuse me i know i got there

1:34:13

is no version of the story where apple

1:34:15

comes out looking good here like it

1:34:18

seems so arbitrary. No

1:34:20

one is buying a game on the service right

1:34:22

there they're paying a subscription fee and

1:34:25

just streaming the content like netflix does

1:34:27

or music streaming services like apple music

1:34:29

do so. You

1:34:31

know their attempt to have their literal blocking

1:34:34

of that always seemed i'm surprised

1:34:36

that didn't get a. More

1:34:38

regular or any regulatory pushback microsoft certainly

1:34:40

is very vocal about it at the

1:34:42

time so they can do it

1:34:44

microsoft is not said anything publicly about that

1:34:46

yet. Some i

1:34:49

related epic has claimed that fortnight

1:34:51

is coming back to the

1:34:53

iphone in the you despite their

1:34:55

band of that game i

1:34:58

suppose that's you know we'll see what happens there but right

1:35:00

now i think if you want to play fortnight on an

1:35:02

iphone i believe. What you can

1:35:04

do is use xbox cloud gaming through the browser

1:35:06

right which is how microsoft did the work around

1:35:08

there. And

1:35:10

then because i mentioned the apple

1:35:12

you dma stuff. Microsoft

1:35:16

xbox president Sarah bond came

1:35:19

out against this very vaguely

1:35:22

i mean well not very very concisely you

1:35:24

know she didn't say too too much about

1:35:26

it but. And she

1:35:28

was very polite people have

1:35:30

not been polite to me you

1:35:32

know he's been kind of spoken about it and

1:35:35

then in the middle i would say it actually this

1:35:37

is probably the best. Written

1:35:39

explanation i've seen of why this is

1:35:41

bad which is the founder

1:35:43

and ceo of spotify daniel who of

1:35:45

course jump started what i believe he

1:35:47

is i believe his original

1:35:49

plan is what led to the dma right. This

1:35:52

notion that apple

1:35:55

was abusing their market power and harming

1:35:57

smaller companies and from Europe, interestingly. But.

1:36:00

You. Know they they. He basically wrote this

1:36:03

really long winded tweet. Tweet

1:36:05

Storm used to calibrate where he kind

1:36:07

of explained all of the tactics Apple

1:36:09

is using an older. The. Double speak

1:36:11

and you know, whatever, so it's worth reading.

1:36:13

But. I. Just wanted to point out

1:36:15

that microsoft. Is supportive of.

1:36:18

This is not the this is that one of

1:36:20

those things where someone from Microsoft has these opinions

1:36:22

or not those of my employers that none of

1:36:24

this is the president access the employer but it

1:36:27

my on. Also this is how really she's supposed

1:36:29

to work with that. We. Want everyone

1:36:31

to apply to them as it doesn't make

1:36:33

things harder. But as long as I'm excited

1:36:35

for everyone equally that's fine and someone someone

1:36:37

circumventing it you point and amigo hates you

1:36:39

make me comply With is where they comply.

1:36:42

Yeah. So.

1:36:44

As em out my favorite merger that

1:36:46

is still the Poison Squad where the

1:36:48

invention of the Sta and Were was

1:36:50

like hey you know at all the

1:36:52

companies are pretty formaldehyde in the milk

1:36:55

because any don't have to refrigerated and

1:36:57

sell her for as as else because

1:36:59

it was so much cheaper that way.

1:37:02

As long as you didn't feed is your

1:37:04

children it was fine. Spine like is it's

1:37:06

didn't see that anybody. Else those.

1:37:09

And. So you know it took regulate

1:37:11

to see a camper, formaldehyde and milk

1:37:13

sitter. How much? examine embalming costs. And

1:37:16

I. Start early and

1:37:18

I'm on my. Nice.

1:37:22

As as. A

1:37:25

business came out in an insider built on the

1:37:27

X box but he ever series as console which

1:37:30

is what I use three busier when actually is

1:37:32

about. You

1:37:34

can actually configure the seem to have a

1:37:36

resolution of ten a D P, fourteen forty

1:37:38

or for say, And he took

1:37:40

screenshots. You would get screenshots and as resolutions.

1:37:43

Obviously when you play games or sings a

1:37:45

scaled and. A. Lot of

1:37:47

games on the Sears s and particular do

1:37:49

not play and forte. ah but it's not

1:37:51

going to I'm. support

1:37:53

even screenshots of that resolution so gamer

1:37:56

and where else or wherever he took

1:37:58

screenshots can be ten eighteen going

1:38:00

forward. Now this hasn't hit stable yet, so this is probably

1:38:02

a month or two down the road, but that's

1:38:05

coming. I think the, I would

1:38:07

imagine. Why are they taking features away?

1:38:09

Like what's the thing? Well, so I,

1:38:13

in this case, it might just be,

1:38:15

well, be related to disk storage, honestly.

1:38:17

I mean, one of the, now that

1:38:20

you can semi-seamlessly save everything to OneDrive

1:38:22

from Xbox, you know,

1:38:24

maybe these things take up too much space. I

1:38:26

mean, there's no reason, if you're scaling it, you

1:38:28

said, look, I'm 4k, right? But

1:38:31

the game is only really running at whatever, 1080p we'll

1:38:33

call it. I mean, why, why

1:38:35

capture that in 4k? I mean, it's just

1:38:37

a waste of space anyway. Yeah, that's

1:38:39

fine. Charge up for the space. Yeah.

1:38:42

Maybe they got complaints, you know, we're never going to

1:38:44

find out. You know, you don't, like they're never going

1:38:46

to say. Interesting. And

1:38:49

then related to the topic from, yeah, actually we've come

1:38:51

full circle. So, what we

1:38:53

started with. Yep. So Microsoft announced this

1:38:55

past week, they're leg up 9800

1:38:58

plays across Xbox, Activision Blizzard,

1:39:00

ZeniMax, whatever game

1:39:02

studio. So since

1:39:04

this is about, I think this, you,

1:39:07

I think you, it was over the weekend maybe, or we, you

1:39:09

were texting me about this, you were doing the math and you

1:39:11

were right. You were dead on there by the way. It's

1:39:14

tricky to find out how many employees

1:39:16

Microsoft actually has, right? Yes. But we

1:39:18

know how many people that they know,

1:39:20

honestly. Right. Yeah, exactly. There

1:39:23

were 10,000 people that came from Activision Blizzard.

1:39:25

The total number was around 22,000 in Microsoft

1:39:27

gaming, which is part of

1:39:29

that. Across all units. Yeah, it's not everything, but it's

1:39:31

part of it. So it's about 8%

1:39:34

of that number. You

1:39:37

know, Mike Ybarra, who was

1:39:39

the president of Blizzard and was at

1:39:41

Microsoft before that and left and now

1:39:43

came back as left. You

1:39:45

know, he's, and I don't know

1:39:47

that those things are in any way, any way

1:39:49

related. I was, he was a cool guy, actually.

1:39:51

I didn't know him personally, but I, he was

1:39:53

a guy kind of know virtually or whatever. But

1:39:58

I was kind of happy he was coming back to Microsoft. that

1:40:00

lasted about 13 seconds, so that's the

1:40:02

end of that. Yeah, so it's, you

1:40:04

know, just unfortunately this kind of

1:40:07

thing I feel like was

1:40:10

inevitable, right? I mean, just too

1:40:12

much overlap. It's

1:40:15

interesting, you would think that

1:40:18

the Xbox group would be

1:40:20

leaner and Zenimax, it's

1:40:22

been what, four years? Right.

1:40:24

I expected this to mostly be Activision Blizzard

1:40:26

and it is, but it's like, oh hey,

1:40:28

while we're taking out the trash, let's go

1:40:30

cut that way. I don't know. I don't

1:40:32

know. Yeah, Bobby Kotick, right? Yeah,

1:40:35

the trash, we're gonna need a trash

1:40:37

bag. That layoff costs more than all

1:40:39

the others come by. That's one golden

1:40:42

parachute. The thing is, you know, as

1:40:44

far as these things being small, leaner,

1:40:46

whatever, honestly, back

1:40:49

when Microsoft was a simpler company, what

1:40:52

used to be called at one point MSN,

1:40:54

right, was in this part, like a separate

1:40:57

part of the campus geographically called Red West,

1:40:59

like the Xbox

1:41:01

stuff used to be something called

1:41:03

the Millennium Campus, and then when they were

1:41:05

doing Zoom, that was actually right in the middle

1:41:07

of the campus, but it was like an aircraft-sized

1:41:10

building with, I mean, what

1:41:12

looked like thousands and thousands of people

1:41:14

just doing graphic designs that you could

1:41:17

etch into the back of a, like

1:41:19

a Zoom no one was ever gonna buy anyway. These

1:41:22