This Week in Tech 459 (Transcript)

It’s time for Twit, This Week In Tech. Ben Thompson from Stratechery joins Larry Magid and Brian Brushwood. We’ll talk about the week’s news, Microsoft Surface Pro 3, it’s here. Is it time to kill it? That's what Ben says. Amazon behaving badly and Ebay under attack. It’s all coming  up next on TWIT.

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Leo Laporte: Bandwidth for Coding 101 is provided Cachefly. At C-A-C-H-E-F-L-Y dot com. This is TWIT This Week in Tech, Episode 459, recorded May 25^th 2014

Plaudits and Brickbats

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It’s time for TWIT This Week in Tech, the show where we cover the week’s tech news and because it’s Memorial Day weekend none of the regulars are here.

Larry Magid: I'm a regular.

Leo: Hahaha!

Brian Brushwood: We’re the irregulars right?

Leo: It’s the irregulars, start with Brian Brushwood.

Brian: We’re the Keller Street—

Leo: Keller Street Irregulars. 140 B Keller Street, yup.

Brian: Yeah.

Leo: It’s nice to see you Brian.

Brian: Dude I'm so thrilled that I am your last ditch date for this evening Leo. Thank you for calling me last minute.

Leo: Don’t tell people. Anyways, it’s nice to have you on Brian is a professional magician. You can book him at – what is it, shwood.com?

Brian: Scwood.com, yeah.

Leo: Yeah, he also sells scam stuff online. It’s kind of nice, one of the few online stores where they actually admit that the stuff they're selling is a scam.

Brian: Oh my god, dude real quick, normally this is at the end of the show. Real quick, we have a hat that will put a man in the hospital. If you go to scamstuff.com, it’s called the Rogue’s Revenge. It is a hat with buckshots sewn into the back so that if you get attacked, you whip off your hat, I grab  the bill like a handle and you beat the crap out of the buy and you send him to the hospital.

Leo: [laughter], that's special.

Brian: It’s adorable.

Leo: It’s plus one defense, two times attack multiplier.

Brian: Hahaha.

Leo: It has – that's amazing, so it’s basically a weapon hat?

Brian: Sure, I mean legally I don't think I should—

Leo: Did you design this? Did you make this yourself or was this something you found and you decided to sell to your friends.

Brian: No we partnered with a company called Shomertech that makes self-defense stuff and what we did was we took their existing product and we added—

Leo: Buckshot.

Brian: …I don't know some, some – yeah buckshot. We weaponized their stuff.

Leo: And of course it has the Brushwood logo on it. Brian is the host of Scam School.

Brian: Also, hey let’s talk about the tech news. Let’s talk about anything besides the legalities.

Leo: I haven't even introduced the rest of the team here. But it’s good to have you once again Brian and thank you for stopping by. Scamstuff.com

Brian: 23scadooscam.org is our new website.

Leo: Says the host of Scam School. And Court Killers, which is a scene on most of the same internets.

Brian: You can find us on the interwebs.

Leo: Courtkillers.com and I’m not done, you also do – what else do you do?

Brian: Night Attack, Scam School,  Weird Things Podcast.

Leo: I forgot, Night Attack used to be one of ours didn't it?

Brian: Was it? I don't remember. It’s weird.

Leo: NSFW has spun off into Night Attack, is it Nightattack.com?

Brian: Yeah Night Attack is basically NSFW with a billion more curse words.

Leo: It is not Nightattack.com though, whoo. Let’s close that page. Also welcoming from Stratechery, a guy I've been trying to get on the show for a long time, he is in Taiwan where it is six in the morning right now. Ben Thompson, it’s great to have you Ben, welcome.

Ben Thompson: Well, it’s great to here.

Leo: Ben has his own podcast which he does. Is it weekly called Exponent?

Ben: Yeah, Exponent.

Leo: And I really became aware of Ben because of his blog and I've been reading it religiously. It is really – the name is good. It is Tech Strategy, Stretechery and some of the most insightful posts about tech, the tech world tech news. Really, really excellent stuff so I'm glad to get you on. Formerly employee with Matt Mullenweg at Automattic. That's the folks – the business arm of Wordpress. He’s also worked at Apple and Microsoft where he worked on, Windows 8.

Ben: Windows 8.

Leo: Did you work under, what's his name?

Brian: Steven Sinofsky.

Leo: He who shall not be named.

Brian: Very, very far down under.

Leo: Okay so you didn't – you weren't—

Ben: I think he knows who I am now but he didn't know I worked there.

Leo: You weren't exposed – yeah. You weren't exposed to him at the time. Why must’ve been interesting. I’d love to hear your stories, we’ll get to that about Windows 8 development. But let me introduce also our third panel member. Of course the great Larry Magid of CBS radio. Regular on TWIT, it’s great to have you Larry.

Larry: It’s always fun to be here Leo.

Leo: Yeah we like having you on the show.

Larry: Yeah I just came in from Paris last night so if I start dozing off, little jet lag.

Leo: Gosh we have world travelers. Larry’s in Silicon Valley but fresh off Paris. Ben is in Taiwan and Bryan Brushwood is in the people's republic of Boston.

Brian: Hahaha.

Larry: Austin, I'm going to be there next month.

Leo: Yeah?

Larry: We should hang out.

Leo: Nice town.

Larry: Yeah I love Austin.

Brian: Dude, Austin is – it’s amazing to watch how similar Austin’s explosion has been similar to the Bay Area. You know to San Francisco and so on.

Leo: Yeah, in your dreams Brushwood, in your dreams.

Brian: …traffic jams. [laughter]

Leo: So this week Microsoft announced Surface Pro 3. The third surface in eighteen months. And while the reviews have been mostly positive, I think the only negative thing I saw was that battery life was little bit disappointing. It’s thinner, it’s faster, it’s running the current high end Intel fourth generation core processors. It is pricey and Microsoft pretty much admitted “We don't want to, you know eat the low end, we want to keep a vital eco-system of OEMs. So were going to go at the high end. We are aiming to be exactly the same as a comparable Apple Macintosh laptop”.

Brian: All right, first of all I actually think this is a smart decision for them to make. But understand, like I am on the outside of this I haven't read all this stuff so you could tell me like they are definitely not trying compete with the iPad market because the first generation of Surface very much looked like “Hey man, it’s an iPad with a keyboard”, whereas this sounds, from what I've heard so far like they're definitely trying to compete with the laptop market instead.

Larry: Well, they always had optional keyboards. But this one’s got, what is it called, the friction keyboard so you can actually hold it in your lap and the screen won’t collapse.

Leo: It’s very much like the original type keyboard but it has a few little extra.

Larry: But the other thing about the keyboard is I haven't tested the new one but all of the type of keyboards they've had are still a little smaller than your standard keyboard. So for those of us who type very fast, it’s a little bit of a problem having a slightly smaller keyboard. I would – that's why I use the Mac Air.

Ben: Well, this one is a little bigger.

Leo: And the trackpad’s bigger too. Have you played with it Ben?

Ben: No, no I haven't. I have an original but not the third one. Yeah I think it all depends on the context that you look at it with, I mean  compared to the other Surfaces, I think it’s a good product. I think there is a niche that is interested in this sort of product. I think the bigger picture is looking at the program as a whole as compared to looking at one any individual product and that's where the challenge is.

Leo: …and you wrote the article the day after the announcement, it’s time to kill Surface, in your words. The problem Microsoft has is that this is – the Surface is their first hardware. They have never made PCs. They changed that long term strategy a year and a half ago. Risking their relationships with all the other Windows hardware manufacturers. Plus, you know kind of muddying the waters and they said “Well we want to make a machine that is as good as Windows can be”. I do feel like I kind of agree with you Brian, that they kind of are less focused on the tablet these days and really are kind of making a laptop computer almost with a removable keyboard. Why do you think Ben, it’s time to kill the Surface though? What's the issue?

Ben: Well, I think you just kind of articulated it. I feel like the – again, if you look at it in a vacuum, the move to focus on it being more of a laptop, a laptop with tablet features makes a lot of sense. It’s a much more, I think, coherent product now than it was before. The problem is in the process of having a new product and a new goal and a new niche, you're by definition forgetting the original goals of the entire program. And it happens to be that the new product and the new goals actually defeat the original purposes of the product in the first place. And I think it’s a classic example of, they're kind of a sunk cost. You're thinking about “Well, how do we make this better” and you forget why do we even have this in the first place. If you step back and look at why do we even have it in the first place then you realize “Ooh, maybe we’re actually already pretty far down the wrong path and we’re continuing to go down on it and maybe it’s best to step back and reconsider the whole thing”.

Leo: You're saying Surface made sense when Windows 8 first came out?

Ben: I think it was there was definite arguments on both sides when it came out. But there was definitely a case to be made both from a product and a business sort of standpoint. Now I think that case is gone and it’s existing because Surface exists and so if you look at it like “Oh, we’re making Surface, how do we make it better?” then it’s a great product. I think it improves in a lot of ways. But if you look at it as “Why do we have the Surface program at all?” then that's where I have problems with it.

Larry: Well, I think the key question is do we really want a laptop that can convert into a tablet? Which is essentially what it is right? It’s not a particularly viable tablet. If you're going out and you wanted a tablet and you wanted to occasionally type I'm not sure that's what you'd get. And if you wanted a laptop that you will use as a laptop, wouldn't you be better off with a Macbook Air or one of the good Acers of the many excellent small laptops that are in the market. I mean my Mac Air, sure it’s a little heavier but not significantly heavier then what their offering and it’s I think a better laptop. Now it’s not a tablet, but on the other hand—

Ben: Well I think – that's exactly the point though, it’s like, yeah if you go back to kind of first principles, the very premise of Windows 8 and the way I frame it is Surface it the physical manifestation of Windows 8. Like the very premise is that people want a one device that does both and I think that premise is flawed.

Leo: Yeah because what was wrong with Windows 8 was this hodge podge of touch and desktop.

Larry: You know personally, I just travel with a small laptop and a seven inch tablet so I've got both and I use them in different situations, different scenarios so—

Leo: You know I, and I'm sure Brian will have something to say about this, but I think that the tablet’s dead. I think that people are choosing to either bring a mobile device, a phone with them or a laptop and nobody needs this then in the middle anymore and iPad sales have slowed dramatically.

Brian: Okay, first of all Leo, you are a hundred percent right in that the worst place to get into is the mushy middle. The mushy middle between two different objects is not a good place to launch a product because the natural order of brands and for things is to diverge constantly right? So in that regard, try this one for size right, now keep in mind I haven't seen this device, I don't know what it looks like whatever. Let me hypothesize about why this might be a good place.

Leo: Why should you have to see it to talk about it? I think go right ahead.

Brian: Okay, thank goodness.

Leo: You don't need to know anything about it just—

Brian: Welcome to This Week In Tech.

Leo: [laughter].

Brian: Here’s what hypothetically might be smart about this is the way Surface 1.0 was launched was “here's another tablet that has an attachable keyboard”, the way their launching surface 3.0 is “Here’s a laptop with a detachable keyboard”.

Larry: Right, right.

Brian: And that might be really smart right because it’s like—

Leo: It’s a subtle different but I think it’s closer to what the market’s looking for frankly.

Brian: And plus also I suspect that they are identifying a segment of the market that is underserved. Like nobody who edits photos, nobody who is editing videos is using their iPad to do it, right. They're using their laptop is their going to use any kind of mobile device whatsoever. So if you have what ostensibly is one of those content creation device s instead of a content consumption device. And you know whatever you just frame the existence of a keyboard slightly differently. I think that might be a really smart playing on Microsoft’s part.

Leo: Remember the first Surface lost Microsoft 900 Million dollars. They took an almost billion dollar right out.

Brian: Which by the way is less than the Xbox lost Microsoft. Microsoft lost on Xbox, they lost a billion dollars, which turned out to be an okay thing when they had the next two iterations.

Leo: Right.

Ben: Well if it makes you feel any better, I basically indirectly sent the article I should kill Xbox two but I think they actually nailed it.

Leo: Actually the most of the drumbeat is spinoff Xbox, right. Steve and others have said “Let’s just spin this thing off.”

Ben: I think Brian right though, and that's what I mean by if you look at the product in isolation, I think it’s a good product. I believe there is a niche that prefers or there has to be a niche that prefers this sort of combination. The problem though is by making it the product it ought to be, you're destroying the business case for the entire program. And that's what I get at by saying, Microsoft ought to kill it. It’s not a bad product, and it’s not that they're not doing the right thing in isolation, it’s that by doing the right thing in isolation they're losing the story in the very big picture about why the entire thing exists.

Leo: They're winning the battle but they're losing the war.

Brian: Ben I'm so glad you put it that way because there are so many times where there has been the right product and a genuinely good product but they didn't have the right story to back it. And I like the fact that you're framing it as a story based decision.

Leo: Of all companies, you'd think Microsoft would understand it’s business than anybody else. But I think part of this is a misunderstanding of why people buy Windows.

Ben: Well that's part of it and it’s also – I'm not sure that's true, that's why I actually use Xbox in the article itself because I think Xbox is, I use Xbox to illustrate so makes it actually easier to understand. You know Xbox, the reason an Xbox existed in the first place is that Microsoft wanted to own the living room. And owning the living room means everyone has an Xbox not just gamers. But Xbox now is only, you know you saw them cutting the Kinect last week, was kind of like the last bit about reaching out to everyone as an entertainment system, it’s now just about gamers. Like they've lost the plot in the big picture and that's the same thing that's happening with Surface in my opinion.

Leo: I also feel like, I actually like in the Surface, I think this is pretty apt to the HTC One. A gorgeous device, beautifully made but aimed at a market that barely exists. It is a tiny niche market, high end hardware. Whereas people buy Windows either because it’s really cheap, and I’ll tell you what I hear this all the time on the radio show “I need a $300 computer” or they're in business and they use Windows as a power tool, as a truck to do spreadsheets and they're buying desktop Dells.

Brian: Keep in mind also Leo there's a third element where I believe that there's a significant number of people buying it because it’s familiar. Like quite simply “This is what I know how to do”.

Larry: But it’s not familiar.

Brian: I don't have the time or energy to put into learning.

Leo: Yeah then they get one then they don't know how to use it.

Leo: It would've been familiar if they, and no offense Ben, but if they hadn’t come out with Windows 8 it would've been familiar but they're changed the user interface to the point where it’s not familiar to most people anymore. So if you're going to invest in a Windows 8 touchscreen, you've got to learn the metro interface. I realized it’s not brain surgery but you are changing the paradigm a bit and I think that's the problem as well because it’s not your father’s Windows. And your father’s Windows actually works. I have no problems with Windows 7, it works great on the desktop, it’s great on laptops.

Ben: No offense taken, I completely agree.

Leo: Just because you worked on it doesn't mean—

Larry: It’s because it’s your fault.

Leo: …it’s your fault. Hahaha.

Ben: Had I made every decision that was important to Windows 8—

Leo: Then you'd take the blame, yeah.

Ben: …it won’t be a membership program, I would be self-sufficient financially.

Larry: The irony is Microsoft gives you a laptop with a removable – I'm sorry, a laptop with a removable keyboard or a tablet with an attachable keyboard, however you want to look at it. And then they give you Windows 8 and they essentially force you into an interface. I mean yes, there are ways to get around it and go back to the Windows 7 interface but they made it really hard and so where they could've easily created an operating system that would've been actually all things to all people in the Windows world, they didn't but then they tried to create a hardware that's all things to all people which is kind of ironic.

Brian: The tough thing Larry is that we've seen examples of you know, for example with what Apple made some extraordinarily bold decisions with the way they created their IOS ecosystem where they said “Yes, yes everyone says they want this, everyone’s wrong” and then they went forward. I don't know that I want to pull that tool out of Microsoft’s hands just because they may not have hit the market quite the way that Apple did you know.

Larry: Well, they lost that battle.

Ben: Well the difference though is IOS was a new product. It was new category. I think the issue with Windows is it’s a known category, it’s a very large category. And you know if there is an analogy on the Apple side, it’s something like IOS 7, but even then like from an actual like the way you use it standpoint it was a very, very small change. Nothing comparable to what Windows 8 kind of inflicted on the Windows user base. And it’s interesting that—

Brian: This is actually a really good point you made Ben because  the natural state of things is to constantly diverge. And I've talked about this before but it’s like as origin of the species said you know there wasn't a morphing or coming together of monkey that turned into a man. Instead there was this constant divergence and all these you know some thrived, some died but eventually you add this thread that led from you know, from a chimpanzee to a human or whatever. And likewise, I wonder if the mistake here for Microsoft is not so much that they're trying to enter the space but the mistake is that using the Windows name with it right.  Could it be that simply this is a branding problem?

Ben: Well that was the whole—

Larry: Hey Chad focus on this Mac for a second. So what you've got here is what is called? Launchpad.

Leo: Nobody uses the Mac that way.

Larry: Nobody uses it, I actually had – I know I had to go out, I actually had to search around, I actually forgot how to bring it up because I've never used it.

Leo: This is the IOS interface on a desktop.

Larry: But the point is they made it really optional. It’s kind of, it’s almost hidden. I mean it’s there right? If you really want it, you can have it but they didn't force it down your throats. I like that, I mean if they want to put it there, fine. I never use it. I literally had to kind of hunt around for the icon. But the fact is Microsoft essentially shoves Metro down your throat. And Apple just kind of put it off on the side. I think Apple hoped for people would use it.

Leo: You know who loves the Surface Pro 3? The creator of Penny Arcade. This is the niche market. CW Gabriel, Gabe says “It does everything right, it’s light. I love the kickstand, it’s just what I've been craving.” Of course he’s drawing a cartoon on this thing, the pen is great. I have to say  I you know who the market is, if you use One Note this is the ideal One Note device. It was made to use One Note. You click the pen, the computer comes on and launches One Note. You can write into it, I mean it is like a smart tablet. But I have to say it doesn't feel like something that I could recommend to people if they're in the market for Windows, I'm going to send to Acer, I'm going to send them to Lenovo. It’s hard for me, essentially at the price. Now it starts at 800 bucks for an I3 based. If you get the top of the line it’s 2,000 dollars.

Larry: Wow.

Leo: And then you have to add a $200 keyboard. The keyboard doesn't come with it.

Brian: Leo, do you think this is the kind of thing where it’s like they almost would've benefitted if they had made the price, forgive me I'm sure a bunch of people will be angry that I'm even saying this, but is this the kind of thing where they could've enjoyed a better market position if they had made the price even higher? Understand, like the higher you make your price, the more exclusive – I mean it worked for Apple right? I mean Apple definitely overcharges for all of their crap.

Leo: No but they are at Apple pricing. No but they are now at Apple pricing.

Larry: They're Apple pricing.

Brian: That's the point.

Larry: With the keyboard more, actually more than Apple pricing.

Leo: Are you saying they should go more than Apple pricing?

Ben: No I think that Brian’s right like that's—

Brian: Yes, I think they should. I think they should do something—

Leo: Should they make it out solid gold?

Brian: The problem is when you match Apple’s pricing and you match Apple margins, all you're doing is saying “We are a pale imitation of Apple”.

Leo: You lose, you lose. Oh that's right.

Brian: What they need to do if they want to set themselves apart is they should figure out something a little bit extra that you know whatever effort it takes, or whatever license it requires them to buy and instead you know take that and set themselves apart. If you want to make the incredible claim that you're better Apple, it seems to me maybe you should charge more than Apple. And that's what they're not doing.

Larry: But they have to be better than Apple, not just charge more. You have to market yourself, that's the problem.

Leo: Ben agrees, Ben you agree?

Ben: Well for Gabe Newell, the servistry is better for Apple. Not Gabel Newell, sorry—

Leo: Oh CW Gabriel.

Ben: Yes, thank you sorry.

Leo: I don't know how Gabe Newell feels about this but I'm thinking he’s going Linux. I don't think he’s a big fan of the Windows 8 as I remember.

Ben: Gabe Newell has not been a fan, that's understanding it to say the least.

Larry: That's a tiny makeup of—

Brian: …quotes that we falsely attribute to Gabe Newell.

Leo: [laughter], Gabe Newell loves the Surface Pro 3.

Ben: So I worked on the team that was getting apt for the App Store and  we were very familiar with Gabe Newell’s position on Windows 8.

Leo: Oh he was very negative as I remember.

Ben: But I think for if you're CW Gabriel, the Surface is better than Windows 8. And that's what's good about the current product it is much more defined.

Leo: Wait a minute, it’s better than Windows 8?

Ben: Sorry, it’s better than the Mac.

Leo: Okay.

Ben: Any Apple product that I've had or a Macbook. The problem though is that how many people are like CW Gabriel? And when you get to that point, the kind of the whole economics of why the program exists you know kind of falls apart. I mean the problem is Windows, actually it goes back to your tablet point, Windows was petrified, Microsoft was petrified of what the iPad seemed to be doing to computers. And you know felt that this entire thing is going away sooner or later. And I think what Windows 8 was, was really an attempt to pull everything forward. It’s like we’re going to double down now. If you think about it, if Windows had been successful, if they have been able to successfully frame Windows 8 as being a tablet alternative but you get all everything all at once we would be sitting here seeing like one or the greatest business decisions ever. And the problem is anything with huge upside like Windows 8 had by definition has huge downside. I mean that's the idea of taking, you're talking about Vegas in the pre-show event, that's exactly what it is.

Brian: I think Ben nailed it right, it’s like if what you want to do is position yourself as a game changer, you can't do that if you're the company that is also the establishment right? Microsoft is the establishment which meant that the market was wide open for Apple to be the game changer. You can't be the establishment and also be the game changer.

Leo: It feels like Microsoft is the dog that just woke up and it sees Apple bite its tail and it starts to chase and then it starts going in a circle because it can't catch up. In fact, what's happened is it chased Apple but the lay of the land suddenly changed, even Apple had the rug pulled out from under it on tablets I think. You cannot chase, you have to lead if you're going to be in this marketplace I think.

Ben: Well, I think they've pictured it too. I almost felt bad writing this article because I've written, as you might expect, a fair bit of, it’s certainly been a newsworthy year. And the reality is I think the company broadly is doing really great stuff right now. Particularly when it comes their cloud efforts.

Leo: The cloud is the future. Absolutely.

Ben: And the way that they're treating IOS Android to some extent, essentially IOS as a first class platform where they're developing directly on it now. So they're doing lots of great stuff and I feel like the entire surface program is a bit of a vestige of the previous administration that they have all this capability. They've hired all of these people, they have all these plans and stuff like that. And I'm worried it’s slipping to continuing to exist because it exists and it doesn't really fit with the really great work that the rest of the company is doing in the way that the company is really shifted direction in other places. And this whole conversation, you know Microsoft had a great run of two to three months of everyone being really positive on where they were going and the fact we spend 20 minutes talking about what they're doing wrong I think is kind of emblematic of what makes the whole thing unfortunate.

Leo: Welcome to Microsoft’s world. Satya Nadella has been trying to change things. I think this could be something he inherited and is not – I mean he clearly understands enterprising the cloud, that's where he came from.

Ben: And by all accounts he killed the Surface Mini which—

Leo: This was what is was just about to bring up. So all rumors in Paul and Mary Jo Foley on our Windows weekly show said our sources were very clear. There was a Mini. There was a – what is it 8 inch Surface running Windows RT. They were going to announce it. In fact this event, if you look at the invite for the event, it mentioned what, a little thing or something like that. And it was very clear that this was going to be a Surface Mini event. And that something happened and then so it’s your opinion that Satya looked at it and said we’re not going to release it now or we’re not going to release it ever?

Ben: Yeah I mean the specifics are unclear. Apparently some combination of Nadella and Elop—

Leo: Stephen Elop is involved because he’s the devices guy.

Ben: Yeah and the question is “Is it delayed or is it killed?” My understanding – it’s unclear but it was definitely – I suspect it’s killed.

Leo: Does that mean RT is killed?

Ben: Right, I think that's probably part of it like do we want to continue as opposed to—

Leo: Wow.

Ben: I mean the long term goal is to unify Windows phone and RT.

Leo: Yeah.

Ben: The fact that they've kind of launched as separate is a whole other – that's another you know 2,000 words I could write very easily. But I suspect they're waiting for that unification to be done before they launch anything to space if at all. And right now you have the 1520 by Lumia which is already like 7 inches so they already mobile.

Leo: Six but it’s beautiful. I love it.

Ben: Yeah, they're almost there as it is.

Leo: Yeah, and in fact that's the phone that convinced that there's no point in having a tablet.

Brian: No and of course there's rumors that you know , that IOS is going to have a I don't know a – what do they call them, fablets whatever the stupid name is.

Leo: I think that's a bogus rumor but we’ll see.

Larry: What about reading and watching movies Leo, I mean to me my tablet is basically  a consumption machine. Reading, watching movies, I tend to do it on either a Mac or an iPad Mini or a 7 inch Google tablet. But I wouldn't spend a fortune for one of those but I do use if for that.

Leo: Well that's the question, how important is it that you have that sized device? Are you going to go buy one just for that?

Larry: Well, I think Amazon’s smart by pricing it about just over a hundred bucks. The Kindle Fire is started at about 134.

Leo: Yeah but if I'm going to read books, I would rather have a Kindle Paperwhite. If I'm going to watch movies I can watch it on my phone. If you hold the phone just as close as—

Brian: Dude my ten year old is deeply, deeply in love with her Paperwhite. It is true magic to her like –

Leo: It’s a much better reading experience than any tablet.

Brian: Agreed, agreed.

Ben: I think you're kind of getting at the whole Windows 8 problem I think is Windows 8 supposes that everyone’s top priority is carrying as few devices as possible. And the problem is that's true when it comes to a phone, right? We only have a few pockets. But when it comes to actual like if we have the luxury of using multiple devices, well it’s often best to use the best device for the job. And if your top priority is not having one device, it’s having the best device then the whole Windows 8 premise falls apart. And that's kind of the problem.

Brian: I think you're a hundred percent right Ben and I think that what you're describing is like the number one most pervasive in anybody in the marketing world. Outside of the clock radio, there's been virtually no devices, and think about this, outside of the clock radio there’s been no devices worth combining crap has worked out. The only time that you have devices that happen to combine things that they've worked is when they define a brand new category completely for themselves. That's what we saw with the iPhone. The iPhone was not even though they pitched it as “It’s an iPhone, it’s a communication device, it’s the best you know iPod we've ever done.” That was the ostensible claim but in fact what they did was they created a brand new category of device and they own that category. It’s divergence, you want to see divergence not convergence. And what we've seen so far from Microsoft has been convergence. And I think that's a mistake on their part.

Leo: We're going to break, we're going to break.

Larry: …there’s a synergy between a clock and a radio. I mean a clock radio makes sense because it wakes you up with music and so it’s not as if it’s really a multi-function device.

Leo: Who has clock radios anymore?

Larry: Well now you use your phone to wake you up.

Leo: Does anybody have a clock radio?

Brian: I take it back, I take it back. From the chat, I have to give the credit, people are pointing out that also the sport, the sport is the other convergence device.

Larry: Also the multi-function printer scanner.

Ben: No but that's the point, it’s the constraint right? Like the reason why the phone, there's that great picture floating around where there's like ten items and then it shows one iPhone. But that’s because there is a constraint of a pocket. And I'm walking around it has to fit in there but if I'm carrying a laptop by definition I at least have a bag. And now that constraint is much looser and it’s much easier to carry two things.

Leo: I like having a phone and a laptop. I think that's it, I don't necessarily carry that laptop with me. I think you need a computer, I think you need a phone, I don't think there's anything much in between. Except a clock radio which apparently every single person in the chat room still has.

Brian: That's fine.

Leo: I'm shocked, it thought that was like you know, clock radio really?

Larry: It’s right next to my VCR.

Leo: Yeah.

Brian: Think about how many things that people try to invent by combining two things together and think about how ridiculous that's been in the long run. You know it’s like, in general—

Leo: The camel is a horse designed by a committee.

Brian: Exactly.

Leo: And I will end that conversation on that note. We're going to come back and talk, there's lots more and I'm really glad that you're here with us today, Ben Thompson from Stratechery. All the way from Taiwan, where it is very early in the morning but we made him get up early because it’s—

Ben: Well it’s seven now, so it’s getting a little late.

Leo: It’s getting later, it’s cool still. And of course he has the best Skype connection of anybody here.

Larry: Of course.

Leo: [Laughter], just want to point that out.

Ben: If you want to talk about, yeah broadband and whatnot.

Larry: You know what the best thing about being in Europe last week was that it had the best phone service that I've had in a long time because I was outside of the United States. My phone actually worked.

Ben: Yeah and I a hundred megabits down and I paid 3 dollars a month.

Leo: Shut up, shut up. We will talk about net neutrality. We had a big conversation last time. Brian Brushwood was on about 3 or 4 weeks ago.

Brian: Are we all measuring our wieners right here. I've got 300 megabits down, eat that assholes.

Leo: Oh shut up. He’s got Fiber now. This guy, he’s got Fiber.

Brian: AT&T preemptively striking back against Google.

Leo: Do you have Gigabit?

Brian: No, no, no well what AT&T did was like, Google announced they we're coming to Austin and technically we're outside of the Austin City Limits and so I thought I was screwed  but preemptively, AT&T has said “Well we’ll show you, we’ll offer our – I don't know, they have some stupid name for it” but basically it’s 300 gigabits or 300 megabits net down now and then over the summer they allegedly will upgrade us to gigabit.

Leo: Must be Fiber though right, is it Fiber to the house?

Brian: Yeah, no it’s all Fiber to the curb.

Larry: And what do they charge for that?

Brian: There's two versions of it. They claim, what they promote is it’s only 7 dollars – or 70 dollars a month if you do internet preferences. However, when you look into what internet preferences, I'm doing air quotes for the audio listeners—

Leo: What does that mean?

Brian: Internet preferences is “Oh yeah, BTWs, we're going to track all of your traffic. Every set website you go to and serve you tailored ads to you.”

Leo: It’s ad subsidized basically.

Brian: “But you'll save 29 dollars a month”, so I was like “No, thanks for that.”

Leo: Boy that tells you how much those targeted ads are worth. If they were 30 bucks, it must be more really to AT&T. That's amazing, a month.

Brian: Yeah, certainly.

Leo: We're going to take a break, come back for more. We've got a great panel, Bryan Brushwood is here. Also Larry Magid from CBS and saferkids.org. And now I'm going to tell you about something I don't know anything about. Ladies and Gentlemen, project tracking with Atlassian Jira. I saw the Godzilla movie last week, does that help? Go Jira. Jira is named after Godzilla, it is a tracker for teams who are building great products. We're not just talking like a Github here. This is everything you need. Of course it works with Git beautifully. But you could follow your code from all the way from the very beginning in the planning documents page all the way to delivery in one system. And for people who are managing big teams and big projects, and you see that some of the biggest companies in the world use Jira. 70% of the Fortune 500, 70 out of a hundred use Jira. NASA uses Jira and they have some of the biggest projects of all. 25,000 companies in total. It’s flexible and simple enough for a five person start-up, powerful and reliable enough for a hundred thousand enterprise. That is amazing.

Brian: So this is Leo, like I assume and I hope you can explain it to me, like basically you got a project, you got people working on it and similar to what Google Docs innovated is that everybody touches it and it changes real time for everyone right?

Leo: Yeah, well and better then that because this is so widely used there are thousands of Jira add-ons. You could do test management, time tracking, project management, I mean there's literally you go in there and you just see all of the different add-ons because this is so popular. It works, as I said, with Git. It works with Google Docs if you want to use Google Docs. I want you to visit Atlassian.com/twit for more information on Jira. Very affordable, plans start at 10 dollars a month for up to ten users. This is what Pied Piper should be using on Silicon Valley. They are using—

Brian: Leo look, I'm sure this is amazing but I'm not made of money sir. I want to know if this is good before I jump into it.

Leo: Try it free for thirty days, you don't need this Brian. You don't need it, I don't need it and half the audience is leaving. Thank you for joining us, every time I talk about this, they're psshhhwww. Atlassian Jira.

Brian: So dive in for 30 days freesies.

Leo: You know what, if you're a potential customer for this, you know what it is, you know what you would do with it, you probably already looked at it and I'm just encouraging you to give it a try because there is really no better way to do this. It’s atlassians JIRA. And there are plenty of people in the chat room who don't know what it is and I have no clue. Microsoft has its own tools for this kind of stuff right Ben? I mean they don't…

Ben: Yeah, Microsoft—

Leo: They do everything in house.

Brian: They do, some of them are best in breeds some of them are not but, yeah so we—

Leo: We won’t name names. Yeah, well that's the way you should do it. Boy there's so many stories, I don't know where – well, let’s start with the Beats Apple merger.

Larry: Alleged, alleged.

Leo: I am – okay, how many weeks now? Was it two weeks ago I said this is a bogus rumor? Last week, I repeated it’s a bogus rumor. Tech Crunch is saying “Hey, 70% chance this is going to happen.”

Brian: Hahaha, that sounds like science.

Leo: 70 – well, absolutely it’s not 68, it’s not 72, it’s 70% chance that – now we're starting to see cracks in the façade. Some are saying that Tim Cook was very upset about Dr. Dre’s video that he posted on Facebook and pulled down.

Brian: Whoa, whoa, whoa, whoa, whoa, what did I miss? What did he say?

Leo: You didn't know this?

Brian: No, dude I missed all this stuff. I'm not very savvy on this kind of thing.

Ben: Rumored to say.

Leo: No, no, no because you can see, somebody skimmed it and it’s on Youtube. I can't play it.

Ben: No I meant Tim Cook is rumored to say it, no one knows.

Leo: Oh yeah no one knows. I think the whole thing never was going to happen to begin with. Walter Isaacson said, the guy who wrote Steve—

Brian: I mean I don't know why they wouldn't?

Leo: Why would they?

Brian: Well because is an extraordinarily powerful brand. There was—

Leo: So was Betty Crocker but that doesn't mean you buy it.

Brian: Well, I mean I don't know, it’s there and you're sitting on a mountain of cash like Apple, why not?

Leo: You could afford to buy the entire music industry. Do you really want Dr. Dre at your board meetings?

Brian: You want his brand -  I mean here's the thing, look at it this way, you're telling me that if asked any five people on the street what Beats are, you're telling me that not one of them would know what it is?

Leo: No everybody knows what Beats is.

Brian: Exactly, that's the point. It’s like you buy that brand—

Leo: But Apple’s not in that business. That's a headphone business.

Larry: Everybody knows what Apple is. Apple doesn't need brand recognition, they already have it.

Leo: Yeah, they're the number one brand in the world in many cases.

Larry: Yeah – the streaming service is good. Actually the funny part about the streaming service is my original reaction was, you know I respect Dr. Dre but it’s not my kind of music so I kind of stayed away from it and then when the story broke I actually checked out the service and it’s actually a very good streaming service.

Leo: It’s based on Mog which I was a big fan of.

Larry: Right, but even though for those who don't particularly like Dr. Dre’s music it’s still a good service and I don't know why Apple need that.

Leo: No it’s not a hip-hop – it’s not streaming hip-hop, it’s every 20 million songs just like everything else. It’s only flaw is that it came after everything else so it’s last to the market and it has not received a lot of adoption. I told this story before, you know AT&T was offering a family deal, 16 bucks for everybody to have unlimited access to music. That's a considerable savings of up to ten bucks per person I was paying. I went to my kids and they said “No way, we like Spotify. We're happy with Pandora. No.” So they was a non-starter because they already established their you know, they set it up.

Brian: I suspect you guys are playing the wrong game. First of all you're a hundred percent right, everything all of you guys have said is a hundred percent right because Beats is late. They just bought Mog or whatever in the streaming game. However, if you ask people on the streets, they don't say any of that stuff. They don't talk about Beats streaming music service. They talk about one thing, they say exquisite presentation of music. That is the brand of Beats. And in that regard, Apple would be smart to pay a billion dollars or 3 billion dollars.

Leo: Tech Crunch further digging a hole. John Biggs saying “Oh it turns out it’s an acquire”, you know where you hire somebody by buying their company. This was 3 days ago, Apple Beats deal is happening and it’s a Dr. Dre acquire. 3.2 billion dollars to get Dr. Dre in the executive suite and maybe Jimmy Iovine who is very well connected in music. Ben, what do you think? A, was there ever an Apple Beats deal? B, is it going to happen? C, why?

Ben: A, yes there was as far as I know. B, I think it likely will still happen.

Leo: Interesting.

Ben: And C, there is a very compelling case to be made for this deal. And I think the case to be made against it is a little more subtle and different then I think most critics are making.

Leo: So you agree with Brian, it’s about the brand?

Ben: Yeah, well I think Beats brings 3 very compelling things to the table for Apple that fixes you know 3 challenges for Apple. One is the, you know from a business model perspective the headphones are a lot like Apple products. They're taking a quote on quote hardware commodity and they are selling it at a significant premium based on kind of the what they are, the experience of owning them, the brand on the side. And I'm not at all to cheapen what an Apple product is but there's a reason an iPhone sells—

Brian: Well first of all you exactly described an Apple product. What you said is a hundred percent correct, keep going.

Ben: Well the different is that—

Leo: Isn't the Beats brand a little beat up though, I mean they've been sold and bought and sold and bought HTC bought them, Lenovo. I mean they—

Ben: We're looking at it as a bunch of you know 30, 40, 50 year olds and the problem is that's the second best thing they bring is—

Larry: Keep going, you're not there yet.

[laughter]

Ben: No for us, [laughter], for us Apple is the epitome of cool. But time change and I think for people who are in their teens or lower twenties, Beats is very much that sort of brand. It’s the brand that you aspire to. It’s the brand that you want as a present. You know if you look at any music video, go back to Apple’s iPhone launch event, they had the iTunes festival video. Every headphone in that video had no white cords in that video. They we're all red for Beats. And I watch a lot of NBA, every single time they watch a player coming into the stadium, he’s wearing Beats headphones. Every athlete, every entertainer all wearing—

Leo: That's true, yeah. No that lower case b you see everwhere. Partly because Beats has been willing to spend a significant – first of all they have huge profit margins, they've been willing to spend a lot of that money and investment money on marketing. They do – I don't know what their marketing budget is but it’s clearly huge. Every music video has a Beats product placement in it.

Larry: …headphones, I mean come on headphones we're invented in the what? Forties, before that I mean—

Brian: It doesn't matter.

Leo: You're acting like a sixty year old again Larry, stop it.

Brian: Here's how you can gauge Beats’ success, is that by the numbers Beats is identical to Apple in that they do high margins, they do premium aesthetics.

Leo: Billion dollar revenue a year.

Brian: Correct, they also are identical to Monster cables in that they don't significantly have better hardware than anyone else. But they are a premium brand. However, unlike Monster which is increasingly growing in reputation of being you know laughably hilariously, you know like overpriced and stupid. Beats has dodged that, Beats has in general maintained their brand as being an exquisite commodity and I think in that regard that that brand is worth Apple investing in it. I think it’s a smart move for Apple.

Leo: Yinka Adgoke writing in Billboard says five things you're holding up the deal. One, it’s complicated, the biggest deal Apple’s done. Tim Cook’s very first deal. Two, the leak didn't help. The news was leaked too early. Apple was nowhere near ready to have the deal. And it’s true, Apple has not denied it. Nobody’s come forward for Apple saying “No we're not interested.” Perhaps they we're just very early in the negotiations. Three, the video, now this is Billboard’s sources. They say this is our favorite bit of gossip from our sources. Apparently, the Apple family near imploded with outrage when the video went up on Facebook of an excited Dr. Dre with Tyrese in the video they share, unsuitable for a family program or blog. How Dr. Dre will be hip-hop’s first billionaire. Other nice things about Compton. I'm just reading from the – I don't know what that means.

Brian: Wow, hahaha.

Leo: People often forget that despite Apple being this company that makes sexy products with sexy profit margins and sexy retail outlets. It’s kind of conservative and Tim Cook kind of conservative. And apparently the reason this video was pulled down so fast from Facebook, we're only watching the skim of it that somebody put up on Youtube apparently Chief Keef. Let me close this thing.

Brian: I don't know Leo. That's hard for me to buy the idea that basically you know Tim Cooks this dodgy white man who has a lot of money and therefore can't approve of anyone—

Leo: Well, how about this though, where do put Dr. Dre? Where do you put Jimmy Iovine. I mean, are you going to put them in charge of content? What do you do with them?

Ben: Well that is two of the other reasons. I think one is, the fact that is Apple, talk about Spotify’s behind in streaming. But if Spotify’s behind them, what is Apple? There not even in the game and you know Apple is not averse to buying technology to get into something. And they bought iTunes for crying out loud. I mean it’s not a – and Apple has always owned music, Apple has been synonymous with music. And they're no longer the preeminent  brand when it comes to music.

Leo: I understand but I think Tim Cook has to swallow some real – has to really think hard for instance – you know, Dr. Dre has said some pretty misogynistic, homophobic things in the past. I just find it hard to believe that Apple would absorb this.

Brian: First of all I actually think legitimately that would be worth a billion dollars for them to make Dr. Dre a brand ambassador for Apple. I think that would be worth Apple. Apple is in a late place environment for their music streaming service. If you could get a top tier—

Leo: Apple is even farther behind than Beats is, wow.

Brian: Exactly, right and so their buying a first place ambassador for them and I think it might be worth a billion dollars I don't know.

Leo: Not a billion, 3.2 billion. How do you feel now Bryan?

Brian: Uhh, still worth it, still worth it. In fact, I was trying to say earlier, Scott Johnson asked like “How on earth does Beats go for 3 billion and Twitch go for only one billion?” and the answer is quite simply for the brand value. Everybody knows who Beats is, nobody knows who Twitch TV is.

Leo: Everybody who matters knows who Twitch.tv is. Are you kidding, this is a huge—

Ben:  Well Beats did 1.5 billion in revenue last year, I mean that's—

Leo: Yeah Beats made money and that's – well I don't know how much money but given that their profits are probably pretty high.

Brian: Twitch.tv, I'm going to say maybe one in twenty people on the street knows what that is.

Leo: Doesn't matter, it’s a Youtube acquisition. The Youtube people know. What’s number one on Youtube is game videos. This is the smartest thing Youtube could do.

Brian: Well, sure and yes you're a hundred percent right. That has been the greatest innovation in the last ten years. Is Machinima discovering that people love watching other people playing video games and it’s fascinating.

Leo: Youtube’s been desperate to find an alternative to the crotch shot and they found it.

Ben: …Nintendo…

Brian: …crotch shots out, I don't know master chief crotch shot is in.

Leo: Yeah.

Ben: I personally find the whole Dre angle, to me that's the more farfetched one. I don't see – I see the Jimmy Iovine being, coming on board. I have trouble seeing the Dre angle. But I think the whole video thing is kind of overdone. I mean, honeslty if the video, if that celebration video was enough for Apple to scald the deal.

Leo: That's not it, no.

Ben: I mean, it’s actually way more concerning than anything because that means Apple had no idea what they we're buying.

Leo: Right, [laughter].

Ben: I mean anyone who’s familiar with—

Leo: You buy Dr. Dre, you're going to get some videos.

Ben: Yeah, well I mean, well it’s not just that, it’s that if the whole point is to get in to the Beats brand and the way it reaches a new generation—

Leo: Uh-hmm, that's why it reaches them.

Ben: …that's very mild by hip-hop standards. I mean, hip-hop is, I'm no hip-hop expert at all, but it’s very much a very honest genre. The whole point is to hold nothing back. Talk very clearly about your feelings. I'm totally generalizing, I'm not a hip-hop expert at all but the whole point being, like if they didn't know that that's the way things might go down then that's concerning from an Apple perspective. And I doubt the video – I think it was more of the week, like in the Financial Times, the Wall Street Journal, that it was very specific. From what I've heard, it came from the Beats side and that's something that Apple, we know very well is, does not enjoy.

Leo: That's true.

Brian: I don't know, but Ben keep saying he’s not a hip-hop expert, I'm pretty sure that the only way to tell for sure is for us to drop a beat and for us to hear him freestyle for a little bit. That's the only way we’ll know.

Leo: I want a little freestyling, when we come back Ben Thompson will freestyle.

[laughter]

Ben: This chair will be mysteriously empty.

Leo: All right, our show today, you wanted to know what Harry’s was. I will tell you, I will tell you.

Brian: Yeah you we're talking about Harry’s. All right, walk me through this. What do we got here.

Leo: Harry’s, so one of the guys Jeff, who started Warby Parker started this – Harry’s is about a year ago, something like that. Andy and Jeff started it, they realized that there really is, you know if you go to the store and you look at the Fusion razor system, you know you get the handle, you get three blades, you're now at forty bucks. And then – I don't know, what we're talking five, six bucks a blade from then on. These are terrible prices. In fact, the razors are so expensive that nowadays I can't buy them off the shelf. You have to get a clerk to unlock the protection system.

Larry: Yeah this true, that's actually true.

Leo: It’s crazy.

Larry: I know.

Leo: So they said “I think there's an opportunity here.”

Brian: …I mean I don't want to start any rumors but I heard somewhere and this may not be true but I heard that the blades of everyone else are made from the bones of children in Africa. I don't know if that's real or not.

Leo: You know they call them blood razors and I don't recommend – no. So Harry’s, they make their blades, by the way they have their own factory in Germany. So these are really good, you know German steel, German blades the best in the world for strength and sharpness. I'm showing you, this is the Winston kit, they have a Truman kit and they have a Winston kit. And then you—

Larry: I'm ordering one right now, what’s the difference?

Leo: The Winston kit has the metal and you can get it engraved. This is a metal handle and you can get it engraved. It’s 25 dollars, if you want the engraving I think that's a few bucks more. The Truman is a little less expensive but it has a plastic blade. You know it’s funny, some people prefer the Truman because the handle is, you know it’s funny we sent the Winston to Steve Gibson and he ended up going back and ordering a Truman because he wanted – the handle was flatter. It has a different feel to it. But fifteen—

Larry: I'm ordering one right this minute.

Leo: Yeah, get the Truman, 15 dollars you get the handle, three blades a tube of shave cream. So it’s a month of shaving for 15 bucks and then you can get, I mean you can get replacement blades. The design is really well done. You know it’s a lot of these very hard do eject the blades. This just pops right off very easily but it’s a sure attachment. It’s the best shave you ever had. And it comes with something that will actually transform your shave. It’s more than just the blade. It’s the hairy shave cream, which is quite remarkable. It is not an aerosol can. It comes in a tube. It’s good for the environment. Smells fabulous and it will give you the smoothest, cleanest shave you ever had.

Brian: It never spoiled the—

Larry: The reason I'm actually ordering one and paying for it is that even though you send Steve Gibson a free one is that I can afford 15 dollars. I want you to send me that 327 dollar Heil microphone.

Leo: Yeah we’ll send you the microphone and you buy the razor okay.

Larry: I’ll buy the razor, I'm not dumb.

Leo: This is so smooth, I don't even need the cream. The cream smells really good though.

Brian: I’ll say universally man, if you've never spoiled yourself on a razor, just go for it.  It’s so—

Leo: It’s worth it, get a good razor.

Brian: You know, can I tell – I don't know if I've told you the here Leo, I have not shaved my face, I think I've shaved my face once in the last ten years. I shave only my neck but every time I shave it with a crappy razor—

Leo: That's a ten years growth beard?

Brian: I mean I use a beard trimmer to trim it down. I got this permanent scruff thing but it’s like—

Leo: Oh I think there are a lot of guys like you that gave up on shaving because it was such an unpleasant experience.

Brian: I’ll tell you what man, when I use a crappy old razor, it’s like it get razor bumps, I get stupid bloody scabs.

Leo: And then, can I just tell you—

Brian: You know what ladies don't love Leo? Turns out scabs on your neck.

Leo: Scabs, not number one with the ladies?

Brian: Scabs are not that very popular, no.

Leo: Can I just tell you, I know there's so many people who buy plastic disposable razors and shave with them. What is wrong with you? What is wrong with you? Do not do that.

Larry: They're cheap.

Leo: They're cheap.

Larry: They're cheap, yeah.

Leo: And you get what you pay for. By the way, the cream natural ingredients licorice cucumber. That soothes your skin. Moisten your skin with Marula and coconut oils and then refreshes you afterwards with eucalyptus and peppermint.

Larry: And if you're hungry—

Leo: It’s delicious. Yes if you're hungry, you'll be even hungrier after you shave with Harry’s. So here's our deal, visit Harrys.com, get the set, it’ll be delivered right to your door and if you use the promo code TWIT5, T-W-I-T and the number five you'll get 5 dollars off your first purchase.

Larry: Hey I just bought one and you didn't tell me that.

Leo: You moved—

Brian: Hahaha.

Larry: I just spent fifteen bucks.

Leo: I could've saved you five bucks, I'm sorry.

Brian: Don't be like Larry people, come on.

Leo: I’ll tell you what Larry, we’ll throw in a pop screen for you brand new microphone.

Larry: All right, good five okay.

Leo: But all right, so the next ad, just a tip, don't buy till you get the whole ad and you get the offer code.

Larry: No kidding.

Leo: Just a tip.

Larry: Really.

Leo: Um-nm-nm-nm-nm-nm-nm, that is delicious. That Harry’s cream. Okay, I'm mad at Amazon, and apparently I'm not the only one. Everybody seems to be a little upset. We all thought that Amazon was going to change shopping, going to change the experience of book buying. Yeah, they were great until they got a monopoly. Now they're just screwing with everybody. Matthew Ingram writes a great compact. We should get Matthew on to talk about this. Giants behaving badly, this is in Gigaom. Google, Facebook and Amazon show us the downside of monopolies and black box algorithms. The latest on Amazon is this Hachette thing.

Brian: Why I don't know anything about this. Walk me through this.

Leo: You don't know anything about anything Brian. You've admitted that now with every story.

 

Brian: Well, I mean this is what happens Leo when you call me five minutes before the show.

Leo: What do you do? You just do magic all day? You don't read the tech news.

Brian: [laughter].

Brian: I represent the every man. That's what I do Leo and do that very well. I represent their ignorance.

Larry: You should run for president, it worked well for Reagan and Bush.

[laughter]

Leo: So this comes from the New York Times, as publishers fight with Amazon books vanish. The story began with Hachette, which is one of the big five. A French publisher but they have little brands and a lot of other imprints. They are a very, very big publisher. And we don't know exactly why Hachette got on Amazon’s bad side and of course you could speculate it might have something to do with Amazon demanding – yeah they got on their Hachette list. Amazon demanding – that's good, Ben that's good, you might want to make that the headline on your next blog.

Ben: That's was a good one.

Leo: That's good, no that's Ben, Ben came up with that, the Hachette list. Maybe they we're trying to get a better deal from Hachette on the cost of the books etcetera. What happened first was that a lot of Hachette titles including Malcolm Gladwell’s The Tipping Point, Outliers, all of his books we're suddenly 2 to 3 weeks delayed. You couldn't order, even though you could go to a bookstore today and get them. You could to a third party seller and get them. Hachette said “No, we sent them boxes of them. They've got tons of them.” Amazon’s saying “No, it’s going to be delayed”. Now they're cracking down, it’s even worse. This is Brad Stone’s book which I highly recommend, The Everything Store: Jeff Bazos and the age of Amazon, currently unavailable.

Brian: What?

Leo: You cannot buy it.

Larry: There could be other reasons for that.

Leo: You can't – Amazon did not like this book at all.

Larry: That's right, yeah.

Leo: You cannot buy it on Amazon.

Brian: This is really—

Larry: But you get the Kindle edition though.

Leo: Yeah, isn't that weird?

Brian: I mean, first of all I'm really conflicted as far as Amazon. I actually deeply adore, once I became an Amazon prime member.

Leo: Me too.

Brian: Right, like we love the ability to click a thing and have it be there the next day and so on and of course you know weird promises of robot drones bringing us our stuff is very appealing. However, along with efficiency, comes all the baggage that we associate with Walmart, right? We all hate Walmart right? For whatever reasons.

Leo: We’re not talking efficiency here, though. We’re talking Amazon acting in a way that violates the Antitrust Act. Look at this. You may have never heard of Robert Galbraith. His new novel is The Silkworm, a Cormorant Strike novel. This is JK Rowling. This is her pseudonym. This book is out or about to come out, I’m not sure. It’s not available on Amazon!  Currently unavailable on Amazon. The girls of August, a big Anne Rivers Siddon bestseller, can you order it on Amazon? Unavailable on Amazon.

Larry: I love Amazon, too. I’m a prime member, I get stuff all the time, but it has had a negative impact on local booksellers and it essentially owns the online bookselling market. The question that some people are speculating  - Is this an example that they’re flexing their muscles and that they are an evil company and going to have a negative impact on our freedom to read? That’s the big fear, right, that some people expressed at the very beginning when Amazon became literally the Amazon of the book industry. And there are those who think that this is proof of the pudding. That they are, in fact, using their power to control what we read. I think it’s more of a business issue, but it’s a scary thought.

Brian: Is that the claim, Larry? That they’re actually trying to screw over local booksellers by not making things available? What’s their angle on this?

Larry: This doesn’t screw over local bookstores, but the point is there are so many local bookstores that have gone out of business…

Leo: They already screwed them over, Brian. Now they have monopoly power and now they’re screwing publishers, authors and, ultimately, readers, by wielding that monopoly power. In the New Yorker, there was an article in February that said, “Amazon is bad for books” and I pooh-poohed it. I think I pooh-poohed it on this show. I said, “You know, c’mon, Amazon’s great! I mean, yes admittedly, we’re losing our bookstores, but Amazon sells books and they love books.” And, boy I think George Packer was right. I think it didn’t take too long for us to realize.

Ben: I think this is the problem that you’re getting at. I mean, leaving aside whether it’s antitrust or not; I’m not an antitrust lawyer. The big issue is Amazon kind of got the benefit of the doubt with a lot of this stuff, because they so relentlessly framed themselves as doing what’s best for the customer.

Leo: Right! Customer first.

Ben: So even when it came to the book disputes, previously it only affected McMillan, I think it was McMillan, five years ago. They pulled similar tactics. And they could say, “We’re doing it because we want to make sure there’s the lowest price.”  And so even if you disliked what they were doing to the market, you could say, “Well it is true they’ve been consistently trying to have the lowest prices.”  I can see their angle of being good for the consumer. The problem is, now by making books unavailable and doing it on purpose, this is Amazon choosing to do it and they are proving that the consumer actually is not their top priority. Because if it was their top priority, they would keep the books available while negotiating in the background. And that’s the bigger danger for Amazon, beyond any sort of legal remedy which may or may not arise, whether or not they’ve violated anything. I think it’s just for a lot of people kind of lifting the veil that Amazon had very successfully put in place that “Yeah we may do something you find a little uncomfortable, we may be killing local bookstores, but we’re doing what’s best for the consumer.”  Well now there’s an example of doing something that’s not best for the consumer.

Leo: You use the word Walmart Brian. It is a lot like Walmart.

Brian: There’s a fantastic book, called The Walmart Effect, where one of the examples they give is that previous to Walmart every time you bought deodorant, it always came in a box. One of the things Walmart figured out is, “Wow, we’re wasting $.10-$.15 per package to have cardboard printed to put this in. This is stupid.”  So they went to the deodorant manufacturers and nowadays, purely because of Walmart, they cut out $.05-$.15 per product out there and it didn’t just happen for Walmart. It happened for all the others. You go anywhere now and you can’t find deodorant inside of a cardboard box anymore and it’s all because of Walmart. And I understand there is efficiency. What we all want is for content creators and for the people who make the products to get a bigger chunk of it and to demand a more efficient structure. On the other hand, Amazon is not nice to the people who own the content. My fire eating book is $39.99, the retail price for it because we didn’t want to make the cheapest book to teach how to eat fire.

Leo: You really don’t want budget fire eaters! You’re looking for a higher class of fire eaters.

Brian: Nobody says, I want to learn to eat fire and I want to pay as little as humanly possible, right? But meanwhile, they have these aggressive rates.  I think I make like $15.50 per book, so two thirds of the profit goes to Amazon.

Leo: By the way if you had published with a regular publisher, you would’ve made a $1.50 per book. So in one respect, authors, if they do it the Amazon way, are going to do better. I just don’t like to see a company… And yeah it’s great the deodorant doesn’t come in boxes, but what’s scary is that a company has that kind of power to wield and I think you nailed it, Ben. Amazon supposedly cared about customers more than anything else.

Larry: it reminds me of the whole deal between networks and cable companies, who was it, Time Warner? - blocked CBS programming for a while because they weren’t locked into a deal.

Leo: Very much.

Larry: And the viewers were the ones who were hurt by that until they finally worked it out.

Leo: And nobody expected cable companies to love us! But Apple’s done the same thing. When a publisher published an unauthorized biography of Steve Jobs, remember Steve pulled that publisher’s books from the Apple Store. He said, “Well, we’re just not going to sell your books.” But the Apple Store did not dominate the bookselling marketplace. Amazon does. And this is a little scary. So, part two of Matthew’s excellent column talks about Matt Haughey and MetaFilter. MetaFilter is a site some of you remember from the earliest days of the Internet. A great link site. It’s still around, metafilter.com. But something has happened to MetaFilter, and their Google ranking has just tumbled. It’s cost them 40% of their ad revenue. And his point, Matt Haughey’s point, he writes this in Medium, is that, “We could be out of business because something that happened at Google that we don’t know about, understand. Perhaps Google feels like the links on MetaFilter - because that’s what it is, it’s just a link collection just like all blogs were originally - maybe they feel like these are not legitimate links or whatever.”  He says, “90% of our revenue comes from Google AdSense. We do take subscriptions, but very few people pay money for it. Over the last 13 years – MetaFilter is 13 years old – traffic has grown steadily over our site as has revenue. It has allowed us to increase our staff to eight people with full health, dental, eye care, a 401(k), and sane hours.” He’s laying people off and he says, “I don’t know why MetaFilter has lost 40% of its traffic overnight.”

Brian: I’m going to say something that might not be popular,

Leo: Look at the graph before you say anything.

Brian: Well, I will look at the graph but . . .

Leo: Look at the graph because the graph is kind of telling. It’s sudden.

Brian: Sure. But you know what, this is what it means when you build your business on another business.

Leo: It even says that. He says, “Live by the Google die by the Google.”

Brian: Yeah.

Leo: Yeah, but it’s very similar to the Amazon case where we have given a company, Google, all power. If you are not listed on Google, if you don’t show up number one on the search, you don’t exist. Of course you still have your website, but no one can find you. And I don’t care if you’re on Bing.

Larry: No, it happened to me actually. My safekids.com site took some ads that Google didn’t like. I kind of made a mistake and went to these text link ads for just a little while. And I went from number one and number two in the listings on online safety to becoming invisible. When I realized the mistake, I took the ads down and I eventually kind of crawled my way back up. I’m still not number one yet. It’s a very big mistake if you do something that pisses off Google. I didn’t mean to do that. But they have a huge amount of clout and you don’t want to happen.

Leo: Well whatever clout we have, I’m going to send some people to metafilter.com. If you ever use MetaFilter, if you like MetaFilter, go there. Matt’s trying to raise the money to keep MetaFilter alive, because they are not going to make the money…

Ben: The bigger problem is that he has no idea why he did it. You knew it was those ads,

Leo: The black box.

Ben: Right, exactly. MetaFilter wasn’t like the demand media stuff. It was exquisitely built on Google. They existed first.

Leo: They predate Google. That’s right.

Ben: Right. So it’s not like they chose to be popped-up by Google. That was the way things went. The problem is, Google has this power and the problem is not knowing why it happened, what the issue was. And I think this is one of Matthew’s broader points. It’s the same thing with Amazon. And Facebook this week. The guy on Facebook complaining about the quality of news. I think a lot of these tech companies, and one of the great things about tech is the idealistic way that people look at the world, like we’re changing the world. I think there’s almost an ignorance about the power that they’re wielding. It’s dangerous. I mean, it’s messing with peoples’ livelihoods in this case.

Leo: Right.

Ben: I feel like personally in general that these articles very good. Techies need to get a lot more serious about the power that they have. And if they don’t get serious, the seriousness will be put on them, like it was for Microsoft in the 90s for example.

Leo: I love Mark Andreessen’s Tweet on all this. He says, “If we could only get the monopolies to run as well as private companies subject to competition, everything would be great. We gain benefits from the monopolies that Google and Amazon wield.”

Ben: Absolutely.

Leo: But we’ve just got to get them to act as if they have competition.

Ben: I think this is the challenge. The nature of so much technology is it naturally monopolizes. If Google by virtue of being the largest search engine, and all things being equal, is going to increase its lead over the second-place search engine, just because they have more searches. And that’s the case in lots of these businesses where there is the network of fact and returning to scale. Like technology by its nature lends itself to monopolies. This is not new. It’s going to keep happening. It’s going to keep getting worse the more industries that are affected by technology. And it’s something that I think we as an industry need to start thinking a lot more deeply about.

Leo: Brian it is our free-market libertarian. Do you have a solution Brian?

Brian: Well, I don’t know. That’s a very courteous way of you saying, “Let’s listen to the crazy person’s point of view.”

Leo: No, no.  I don’t disagree with you. I am with you!

Brian: I don’t like seeing anybody lose their job, but at the end of the day, if the net core value of MetaFilter is to serve only as a middleman, to hand people off from Google to the site that they go to, I don’t know that the world is a better place for having that extra step in there. It’s up to the world to decide. And, hopefully, what will happen is that MetaFilter has their own core audience, they have their own passionate fans who go to MetaFilter as their alternative to Google, and that they live and thrive and survive on their own. But, again, if that’s not the case, I don’t know what to tell you.

Leo: And you can make a very strong case that the world is a much better place because of the existence of Google. Google has changed the world. We are so inured to the advances that we live with, we don’t even feel them. But think about this. I can go to Google.com, enter in a fairly complex search term and literally, within a second, get definitive answers to almost any question. It doesn’t take five seconds or 30 seconds, or a minute. It’s within a second!

Brian: That’s what’s beautiful, Leo. No matter what your question is, you can find out that you have cancer immediately!

Larry: It fundamentally changed the way we acquire information.

Leo: It’s amazing!

Larry: On a level that is beyond profound.

Leo: I just typed in how high is the Empire State building? In less time than it took to type the question, it gave me the answer.

Brian: It already knows.  It’s like, “Yeah, yeah, yeah – it’s 1250 feet!”

Leo: Yeah, in fact now that’s one nice feature. All Chrome operating systems, if you are on a Google tab, you can just say, “Okay Google how tall is the Empire State building?”  It will still give you the answer faster than it took to say that.

Brian: You know what’s fascinating, Leo, is to see the next generation. Their whole attitude about what they expect out of technology is changed. For example, my daughter is 10 years old and she has no expectation of ever finishing any question she ever writes into Google. She types the first few letters and then she looks at the auto completes and clicks on it. She just knows it’ll be in there.

Leo: If I type, “How tall . . “ And look at that, all I have to do is type How and the very next thing is How tall is the Empire State building? I don’t even have to finish the typing.

Brian: Wow!

Leo: That is mind-boggling! And we’re so used to it. That is mind-boggling!

Ben: I don’t think that anyone’s making a controversial statement here. I think that’s the point. Amazon has done great things as well. And if it were pure evil, then it would be a lot easier to take a position on these sorts of things. And that’s the point. Google has done great things and that’s the MetaFilter issue. You know, MetaFilter should never have taken advantage of the Google fact that they got organically. They’ve never been one of those scammer sort of things. They just started getting more Google traffic because they had good content, and Google, because it’s a good search engine, linked to them. So you’re almost arguing against yourself, Brian, when you say, “Oh, Google’s so good, but they should’ve ignored all that traffic by Google doing a good job.” The problem is, Google started funneling them all this traffic, because they were a good site and Google was doing its job. And then suddenly, Google changed its mind, basically, and the problem is like any smart business owner they had to scale with it, right? The trouble with MetaFilter is it’s all moderated. There’s not a bunch of crap up there.

Brian: At the end of the day, MetaFilter is competing against Google. And Google has no responsibility. MetaFilter is a place where people go to learn things right? And they derive their trends and benefits from Google sending them a lot of links or whatever. For example, Reddit. I love Reddit. It’s great to get on there. But at the end of the day, when I type in, I want to find a thing, do I want you to point me to the Reddit article of today I learned that this thing is a thing? No, I want to go to the thing!

Ben: That makes no sense!

Brian: I’m good at that.

Ben: Google is not generating the answers. The point is, without sites like this…

Leo: There has to be a place to go. That’s right. It’s not the answer from Google, you’re right. It’s an index, that’s all. And speaking of great things, Google just did this photo stories thing in the Google Plus. Again, it’s like you’re giving me all this free stuff. At this point, I’m starting to feel like, What are they up to? What is their sneaky plan? Have you seen the photo stories? It’s amazing!

Brian: Leo? Breaking news! No, I haven’t seen anything!

Larry: Actually, MetaFilter should be happy, because they are getting what the European commission want, which is the right to be forgotten.

Leo: Yeah, there you go. You wanted the right to be forgotten? You wanted it? You ask for? Here it is.

Larry: There it is. Yeah.

Leo: Do you ever put stuff on Google Plus, Brian? Do you have your phone uploading photos to Google Plus?

Brian: No, I disabled that, because -

Leo: So you’re not getting the benefit of letting the Google hive mind have access to all of your deepest most personal thoughts and images.

Brian: By which you mean I haven’t been seduced by the beast. No sir, I have not.

Ben: It takes this conversation full circle. If you go after Microsoft on the Surface or in Windows 8, you can say the problem with that is they were doing it because Microsoft needed it not because consumers needed it. It’s a very similar thing with Google Plus. I think Google Plus in general is much more about identity. Now everyone’s logged in and they use Google whether they realize it or not. I think it’s a success. But the actual Google Plus service itself, Google needs it to exist, so it exists. The reason why none of us were immediately familiar with what you’re talking about, is because nobody uses Google Plus.

Leo: So look, it takes your pictures – for some reason I can’t get into mine –

Brian: - and it turns you into it Chad Johnson!

Leo: It makes a photo album with maps and little captions and stuff, of different things you’ve done. So this is Chad’s trip home or somewhere

Chad: To Boston.

Leo: To Basten.

Chad: To Basten

Leo: It just does it automatically. There he met Jesus.

Chad: I met Jesus, the gamer.

Leo: Wow that’s weird. It’s gone through all of my photos since 2007 and turned them into art.

Larry: That’s the problem Leo. It goes into all of your photos including the ones you don’t want to share?

Leo: But you’re not sharing them. Only I can see this cute album.

Larry: Well.

Brian: This is actually where the money’s at. There are two big things that are going to explode. Number one: we all have a ton of photos and a lot of them are high quality.

Leo: And you’re paying to figure out where they are and what they’re doing.

Brian: Exactly. I spent an hour weeks ago looking for one photo that I vaguely remembered. A friend of mine was talking about September 11 merchandise or something and I was like “Oh yeah I took a photo of after September 11 there was this gift shop and they had a sign that said all September 11 merchandise 50% off and I thought it was offensive”  and where’s that again? And I wasted a stupid hour going through that stuff. If we can get context awareness from our apps to do that. The second thing, also, is a curation algorithm. Something that can look at the composition of the photograph and say I see three faces here, there’s a lot of wasted space over here let’s crop that.

Leo: It’s doing all sorts of super-smart stuff. As Hammie2 in the chat room says, This is awesome and kind of scary at the same time. That kind of sums up this whole thing.

Brian: I would just stop at awesome. It’s only awesome.

Leo: It’s a little scary. It’s auto awesome.

Our show today brought to you by Square Space. Nothing scary about square space. This is a company, talk about customer focus, during hurricane Sandy when the lights were out, the power was down at their New York servers, they hand-carried gasoline upstairs to keep the generators going so that the servers wouldn’t go down. This is a company that cares a lot about your website. If you are hosted by Square Space, you will never go down. They are unbelievable. We try to crash Square Space sites all the time. Inside twit.tv, our blog that’s a Squarespace site. If all you went there right now, it would still hum along.

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Leo: You used to do a great job with these ads on NSFW. You would build sites – I mean, it’s really cool.

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Brian: Well deserved. I mean, they’re genuinely awesome.

Leo: I agree. They used to do this in my hometown paper. They would do plaudits and brickbats. Plaudits and brickbats. That is not going to be the name of my new blog, I’ll tell you that.

Brian: Plaudits and brickbats? That’ll be the title of this episode.

Leo: That might not be bad. Plaudits and brickbats! I sound like an 80-year-old man. I should be wearing a top hat and a monocle and a mustache. I’ve got plaudits and brickbats! Cheers and jeers, there you go. That’s more like it. Roses and onions. Brickbats for eBay! EBay apparently at the beginning of the month learned that they had been majorly hacked and they thought “Well maybe we won’t tell anybody about this.” About Wednesday of last week I heard about this. I immediately went to my eBay account. No word, no warning, so I thought. Well I’m changing the password. Finally, now, if you go to eBay.com you’ll see Important Password Update. Part of the problem is they have 145 million users. Every one of them needs to change their password. They say they’re going to send out emails, but it’s going to take a while for that many people. They don’t know how much has been compromised. That’s the big problem.

Brian: What I recommend everybody does, and I talked to Steve Gibson about this, and he encouraged me -

Leo: Did you really? When did you talk to Steve Gibson?

Brian: Well, we were in the hot tub together. He said, When it comes time to enter your password, just mash your keyboard a bunch and then every time you log into that site, say “I forgot my password”, and then have them send you an email.

Leo: I think that is not Steve Gibson’s idea, but thank you for blaming him for that inanity. I give you a brickbat, sir, for that! Three brickbats!

Brian: No plaudits for me.

Leo: No sir. No sir! So, I think this is another case very much like Target, where the company is not really saying exactly what happened. Apparently there was enough concern that they wanted everybody to change their password. EBay is saying that people didn’t get any financial information. They did not properly encrypt the passwords, apparently. They were encrypted, but not in a way that was effective, so they were very much worried about this. They say it’s a precautionary measure. Credit cards apparently not swiped, but name, date of birth, email address physical address, yes.

Brian: Everything you need for identity theft.

Leo: Basically everything you need for identity theft.

Brian: Exactly.

Leo: Now remember that the CEO and CTO of Target lost their jobs over this. I don’t know what’s going to happen to eBay. Also remember that eBay is owned by PayPal. I certainly hope this isn’t a reflection on that.

Larry: EBay owns PayPal or PayPal owns eBay?

Leo: EBay owns PayPal? That’s right. Who knows who the hell owns anybody. EBay is bigger, so I think they own PayPal.

Larry: They own PayPal.

Leo: Apparently this did not affect the PayPal security system. I hope not! According to VP chief technical officer at McAfee, Raj Samani, inevitably the data that was stolen will be sold online. You are at great risk if you use the same password on multiple sites. Just bad. All bad.

Brian: So, I know in general that you, Leo, are uncomfortable with private corporations having biometric data.

Leo: No not really. I gave Google everything, right?

Brian: Does this make you comfortable with the idea of thumbprints? What is the way to authenticate that? Because somebody could copy that.

Leo: The real issue is that these companies are not adequately securing their servers; they are not storing the information… All this information should have been stored hash, with a salted hash. None of it was. They are just not doing a good job of securing stuff. The problem is, we don’t even know how they’re doing. We don’t know what’s been stolen. They are not very forthcoming with the information about this kind of stuff. They even delayed telling people about it.

Larry: There’s essentially nothing we can do. You can change your password, but you can’t clean up the mess afterwards. The Target breach was particularly annoying. What did people do wrong? They used a credit card at Target?

Leo: They should never have done that. That was a mistake.

Larry: Right.

Brian: But keep in mind, also, and this is important, is remember at the end of the day is that your liability, for fraudulent credit card purposes, is zero.

Leo: EBay is a little different. So for instance say somebody gets my eBay account, goes in and says, Look at this. Leo is selling his Mustang for $20,000. Let’s just change that to $.20. They change it, then they go back and they buy it. Something like that.

Ben: People think of PayPal like a banking institution. It’s all fraudulent and they take all your money.

Larry: By the way, not every country has those protections; the credit card protections we have in this country, that’s not global.

Leo: I’m not sure that’s a good thing in the United States, that we have this protection. Because it has allowed everybody to say, “Well who cares. We’re not going to lose money.” At least not more than $50.

Brian: You were talking about how the move now is to Chip and PIN technology.

Leo: By the end of next year.

Ben: The problem here is, first off they were salted and hashed using eBay’s proprietary technique. I think the problem is no one knows what that technique was.

Leo: I thought they were just encrypted? So you’re saying they were hashed?

Ben: They were, but eBay said, It’s our own proprietary one, and no one really knows what that might be. So it’s even more of a black box in many ways. But the bigger issue here is that it’s an extremely hard problem. It’s easy to sit here and say everyone should do a better job, the problem is it’s hard to secure a computer system by definition. And passwords are really hard for regular people to manage effectively. The broader issue is no one is properly incentivized to fix this. You’re getting at that, with the consumers for credit cards are generally not liable. For someone like eBay or any sort of retailer. I have this for my site. I have a membership program and I can choose the level of verification I want, to accept a credit card payment. And it makes sense to choose a lower one, because you don’t want to encounter problems.

Leo: Or make it easy.

Ben: And that pervades everything. The Target one is interesting. I think it was actually encouraging that the CEO lost his job, because ideally that is providing a better incentive for other companies to do a better job of password security so you don’t lose your job. But I think that realistically, it’s probably going to take something where there are massive penalties associated because otherwise it’s expensive, it takes a lot of time, it takes a lot of expertise, and it’s an unforgiving job that provides the zero benefits. You can’t prove a negative right? You can’t say, Oh this program is paying for itself because we haven’t been hacked. How do you measure that? And that’s what makes it so hard to have companies realistically give it the resources it deserves.

Leo: Once again, you are speaking too intelligently for somebody who’s up too early in the morning in Taipei. So, stop it! Stop it!

Ben: Taiwan.

Brian: You’re at that point of lucidity where you’ve been up so long nothing but brilliance comes out of your mind.

Ben: It’s so easy to see things like they ought to take security more seriously…

Leo: What does that mean? Yeah.

Ben: Yeah. Everything goes back to priorities and incentives and until you grok those priorities and grok those incentives, it’s just a lot of hot air. I shouldn’t say that as someone who also has a podcast, because that’s what we make our living out of.

Leo: That’s what we live on. That’s why I’m going to give you a snack right now, Ben Thompson of Stratechery. A Santa Fe Corn Stick from my Nature Box.

Larry: Yum.

Leo: This is a treat. Now wait a minute. Larry Magid, before you order this Nature Box, stay tuned, because I’m going to give you 50% off!

Brian: If I came to the show I could have one right now.

Leo: I know! If you were here, you could have some Praline Pumpkin Seeds!

Larry: In the studio, I could get some?

Leo: Oh I love this! Everything Bagel Sticks. The thing I like about Nature Box, is that there is no high fructose corn syrup. There are no trans fats. There are no artificial flavors, nothing artificial it all. No artificial colors. It is delicious! These are nutritionist-designed treats. You can get them delivered to your door every month. They have three sizes of boxes. It’s great for family and great for a business too. We get like a dozen nature boxes a week, I think, because people love them. Look at all the treats. Hundreds of delicious treats. See my mouth is watering now. You can, if you choose, narrow it down to savory sweet or spicy. You can also choose special dietary needs, like vegan, soy- free, gluten conscious, lactose and nut free, non-GMO.

Larry: If you selected all of them, what would happen? Would you get anything?

Leo: Well, I would suggest, get this first box. You can get 50% off your first box when you use the offer code TWIT at naturebox.com/twit .  What I would suggest is unless you have a specific allergy or something, just get an assortment.

Brian: Two of my three daughters have food allergies, and both to nuts. And I just looked at their FAQ and it says here that in just a few weeks you have the option of choosing the snacks that best fit your dietary needs. And you can write them at support@naturebox.com, which I will certainly be doing.

Leo: Well this one is nut- free.

Larry: Is it true that plantains are free of all of those things? That vegan, vegetarians, soy people can all eat it?

Leo: That’s right. Everybody gets all the plantings they want. And they’re not called soy people. That’s not the preferred nomenclature. Soy people should eat more plantains. But wait a minute. Go back up, Chad, see right here, About This Snack, and it shows you with very easy logos, what the ingredients are. This is a nut free snack, for instance, this is a savory, vegan, low-sodium… This is really nice. This really pays attention to the nutritional value of the snacks. We have loved them! They’re all really delicious. Lisa is a big fan of the dried pineapples, which are also nut free. And the best dried pineapples we’ve ever had. The dried fruit on here is the best we’ve ever had. It’s just amazing.

Brian: Does it taste better than Harry’s shave cream?

Leo: Well that’s a tough choice! Yeah, but you wouldn’t shave with Everything Bagels! Anyway, I just want you to check it out. You will be very, very happy with your Nature Box. First one half off at nature box.com/twit. Use the offer code twit. By the way, did you see that they also donate nature boxes and food to food banks around the country? 150,000 meals have been donated to date by Nature Box.

Brian: Do you know what I love Leo? It’s that that kind of thing, and forgive me for phrasing it this way, it’s so not extraordinary to donate – you know what I mean?

Leo: I think who started it was Tom Shoes, right? Where they give a pair of shoes for every pair you buy.  Warby Parker does that with glasses. This really encourages me about corporate conscience. Maybe they are doing it for PR, who knows. But I feel like they’re not. I feel that corporations are really starting to care and want to give it back.

Brian: Here’s the best part Leo. Even if they are doing it for selfish reasons who cares? The end of the day people are getting fed. How great is that?

Leo: I hope they’re feeding everyone everything bagel sticks. Because they are really good.

Larry: I mentioned that I tasted the snacks that Delta gives out.

Leo: Airplanes! Wake up and smell the Nature Box! Oh that’s brilliant! Why hand out those crappy snacks?

Larry: Well they’re cheap.

Brian: Wake up and smell the Nature Box.

Leo: We have a kid in the audience who wanted to try it. Come here, try a Nature Box, you’ll see. This is good. Do you like Everything Bagel Sticks? What’s your name? Ethan. Where did your brothers and sisters go? They just laughed? Oh, there they are. Okay. You guys are from Perth, Australia? They don’t have Nature Box in Perth. So go ahead and eat them, and you will know why America is the best country in the world.

Brian: This is why we won the Cold War!

Larry: Well, actually having just come back from France, routinely you get good food. They go out of their way.

Brian: They have Pollution Box! It’s a terrible alternative to Nature Box.

Leo: They have the Royale Deluxe, isn’t it?

Brian: The Royale with cheese.

Larry: You order coffee, and you actually get good coffee.

Leo: It’s amazing! I love France!

Brian: And we’re not talking about a paper cup. I mean, you get a glass of beer.

Leo: In a glass!

Larry: you know, if you stand up at the coffee bar you pay less for your coffee than if you sit down? It’s a euro for coffee if you stand. If you want to sit in the seat, it’s 2 ½ euros.

Leo: Wow. That seat’s expensive.

Larry: They’re renting seats. But you sit there all day.

Leo: Good, huh? The whole family loves them. Nature Box. 

WWDC Keynote coming up a week from Monday, June 2. It will be 10 AM. Mark Gurman, who just got out of junior high school, apparently, he’s very young. I’m reading this guy. We quote this guy all the time. He works for 9 to 5 Mac. He has the best sources anywhere. He’s brilliant. And I find out he’s 20 years old. It’s scary! I shouldn’t be in this business. It’s a young man’s game.

Brian: Soon it won’t matter. You can be a Mumm-Ra, a decayed old husk, and it won’t matter. You will be a vibrant youthful…

Leo: (speaking like an old man) I want to welcome you to the plaudits and brickbats blog! I’m 20 years old!

Ben: Stop saying plaudits and brickbats and I think you’ll be fine.

Leo: Apple apparently, according to Mark Gurman again, the youngest man with the best connections ever, says there will be OS 10.10, which is very confusing. There will be IOS 8 with new Health Book fitness tracking software, improved Maps, new iPad features, we don’t know what they are. Are you snoring?

Larry: Yeah, I’m snoring. Go on, keep going.

Leo: There will be new hardware. Probably new MacBooks. Retina MacBook Airs. Anybody?

Larry: That’s good.

Leo: I’d jump at that.

Brian: Are you kidding me? There’s no rumors of any Iwatch?

Leo: There are rumors, but I don’t know.

Ben: The two ways they could surprise us are if the rumors of a full resolution large-format iPhone turn out to be true, some kind of curve . . .

Leo: They want to announce that in June.

Brian: So, do you think there’s a chance of an iWatch?

Leo: No. I don’t think they’re going to even announce that this year.

Larry: What do you think the retina screen will do to the battery life?

Leo: I think that’s one of the reasons you might not see a MacBook air with retina. That’s a lot of pixels.

Larry: To me, I love the fact that I can go all the way across the Atlantic on one battery with a MacBook air.

Leo: 13 hours on the 13 inch.

Larry: It really changed my life. I go to conferences now  -  I used to go and I would immediately look for a seat next to an electrical outlet. That was my biggest priority. Now I can go to a conference all day, take notes, go on Wi-Fi and not have to worry. It’s enabling technology, not just an upgrade. It’s a substantial improvement in my life style when I have to go on battery. And it’s rare that you get any technology that you can make that statement about.

Leo: That’s why I buy these by the dozen. These are fake electrical outlet stickers and I just go around the airport and I put those everywhere.

Larry: And then you get the real one right?

Leo: Right. It’s so funny to see everybody flocking… $5.75 for a set of four kids.

Ben: The MacBook Air is a curious situation to me, because when it was originally launched, the MacBook Air was the highest, most premium laptop out there. There were news stories about how they were so light and so thin. But then, Apple positions the MacBook Air as their entry-level version of the laptop right now. So with that being the case, why wouldn’t you ruin the battery life on it? It’s their entry-level throw-away every-college-kid’s-gonna-get-it computer.

Larry: well first of all, it’s not the brand that you’d want to flush down the toilet. My 13 inch MacBook air I think cost me $1400.

Leo: That’s more expensive. The cheap one is the 11 inch.

Larry: You can get that one for $899. But that’s still twice the price of a comparable, in terms of specs, Windows laptop so it’s still not cheap. It’s just less expensive than the other Mac.

Leo: I’ll tell you one thing I know we’ll see and that’s a 4K display. The MacBook Pro with retina and the Mac Pro both support 4K displays. Apple has updated OS 10 to support 4K displays.

Larry: I think it’s a really smart move. I think that by and large the entire nature of 4K has been mismanaged from the very beginning. This is a whole technology where they are selling the displays when literarily nobody could tell the difference between 1080p and 4K. When you go to the movie theater, you are not even seeing 4K at the movie theater you’re seeing 2K at the movie theater.

Leo: That’s because you’re 20 feet away from the screen.

Larry: Correct, but if you want to do it right, and this is what I think Apple will do very smartly, sell 4K based on the real estate of the screen. I pointed this out before. I’m looking at six monitors right now. I would much rather have one very large monitor that had enough room to fit all of these individual things on.

Leo: Although that’s a good idea.

Ben: Well, that’s trivial. You could buy 4K display and do that now. I actually disagree. I think what Apple will do is use retina which is…

Leo: High dpi . . .

Ben: Yeah, making it -

Leo: Oh wait a minute. I have a 4K display. I got one of the only two that have 60 Hz refresh rate. There is an Asus and there’s a Sharp, which Apple sells. They are insanely expensive. They cost as much as the Mac Pro itself. 2500 bucks. But, with 10.9.3 they have high dpi so I run it at 1080p and it’s the crispest thing I ever saw. It’s not real estate. It’s just beautiful, because of the subpixel rendering. And then when I’m looking at an image or video then I get dot for dot and it’s the best of both worlds. You’ve got to see it before you pooh-pooh it, Brian.

Brian: I was just saying that in general what you do is you get a modest increase in fidelity at a major major price.

Leo: There is a ridiculous price premium. Yeah I agree.

Brian: Whereas if you are selling real estate, you know it’s quadruple the real estate and it’s four times larger than 1080p. It’s a much smarter way of doing it.

Larry: At CES last year, Sony had a 1080p set right next to the 4K set and I was standing 10 feet from them watching their program which was custom-designed to show up their 4K. And I could barely tell the difference. It’s nothing compared to the difference between standard definition and 1080 P. And so, if they are going to sell it to watch movies, then they’ve got to do something different. So, I agree with you. For the computer screen, yeah I can see it making sense. But as a way of watching movies?

Brian: If you are talking about content, viewing-subjective experience, I heard some rumors. A friend of mine is over at Warner Brothers, and they talked about the experience of seeing an HDR display. Every time they release something on Blu-ray, they have to take our eyes all the way to the brightness of the sun and all the way to the darkness of candlelight and so on. But our displays have an extremely narrow high-end and low-end of brightness on there. So he talked about displays that are being made that are intentionally crafted using different technologies, so that they are so bright that you have to squint to look at them. When the sun shows up, you are physically in pain!

Leo: This is not good! Why would I want that?

Ben: Because it feels like reality.

Leo: It burns! It burns!

Larry: There’s nothing great about reality when it comes to losing your eyesight!

Ben: What matters is, if you want to motivate consumers, you have to be able to have your product look different from the other guy’s product.

Leo: I think we’ve underscored the problem Apple is going to have a week from Monday. Almost anything announced short of an iWatch, people are just going to say, “Well so what.”

Ben: Well Apple has been pretty successful with so- what announcements for a lot of years now.

Leo: But don’t you at some point have to innovate? I guess they have the Mac Pro.

Larry: In 2007, they came up with the iPhone.

Ben: Why do people love Apple products? Why do people develop attachments?

Leo: Because it just works.

Ben: It’s the refinement.

Leo: Yeah.

Ben: It’s the bringing it all together. And that is very much innovation. It’s not headline- writing innovation but it’s doing the “snooze-fest” year after year, but making it better and better. If you look at tech, in the very big picture, you could arguably say there have only been four innovations in the history of Tech, period. That being the mainframe, the PC, the Internet and the smart phone. And everything outside of that has been a snooze-fest. It all depends on your context. I think we’re so enamored of the headlines.

Brian: I’m going to back that up here and say that none of Apple’s home runs have been daring innovations. They have all been extraordinarily safe bets. The time to take risks is when you get something like a Newton. It’s only 20 years after the Newton that they get around to making the iPhone.

Larry: None of their successful products were the first ones in the category. They were MP3 players before there was iPod; there were smart phones before the iPhone; there were certainly tablets before the iPad; what they did was simply refine them, made them less complicated to use, and managed to suddenly enter a market that existed and excel at it. Which is pretty impressive.

Brian: It’s the Virgin Atlantic model. You know, Virgin does the exact same thing. All they do is take stuff that already exists and make it exquisitely awesome. Transatlantic plane flights were already around, they just added massages and a bar to it. That’s what Apple excels at.

Leo: You know what you really need to do? You need to get the new $45,000 suite. Did you see this? What is the airline? It’s an Abu Dhabi airline.

Larry: Etihad?

Leo: Yeah. Etihad. It’s one of those 380s, you know the big airbuses. There’s a guy trying to raise money on Kick Starter, trying to raise money to buy a passage on this. It is, let me see if I can find it here, it is a three room suite on the airplane.

Larry: How many people can you bring it on?

Leo: Only two. And it’s $45,000 for a seven hour flight for two people.

Larry: Well, compared to flying private, it’s probably a good deal.

Leo: They call it The Residence on this plane, the A380. You get a shower stall, you get a living room and you get a bedroom.

Brian: So, wait a minute! We’re looking at a Kick Starter, for a guy who wants to ride that?

Leo: He wants to, yes. He’s trying to raise money. He’s a travel writer. Don’t knock it! He’s got 476 backers. He’s raised $13,000 towards is 45,000.

Ben: This sounds like something that Justin and I would put together. It seems ridiculous to try to raise money for this.

Leo: Wait till you see this thing though! It’s the first multiroom suite ever released on a commercial airplane. Don’t you want Ben Schlappig, that’s his name, to ride on this plane?

Larry: The reason why I wouldn’t, besides the fact that I don’t have $45,000 to throw away - the beauty of flying private and I have friends that have private planes and occasionally I get to, is that you don’t have to go through security. You can drive up to the plane and get in. I don’t think you’ll get that benefit in this deal. To me 42,000 maybe but not 45,000

Ben: Private can’t fly transpacific. If this was going, say, to Taipei. I’m going to San Francisco next week…

Leo: You would love this, wouldn’t you?

Ben: I’m kind of an air traveling geek.

Leo: Well then we’ve got the perfect person here.

Ben: The thing that surprises me most about this product is that it’s on such a short ride.

Leo: A seven hour flight.

Ben:  Right. Which could actually be a private flight.

Leo: See you go up the stairs to your private… This is just first class don’t get excited. The door closes. The TV comes on. You relax. What are those? Igloo coolers? What are those? Those open up and you can put your shoes in there. And then here’s your shower. Your private shower. Walk through there. And I don’t know what else is in here. Oh, here’s your bedroom.

Larry: Double bed. Wow look at that.

Leo: Yeah. Double bed. Lots of room.

Brian: You know what, Leo? Sorry, announcing right now I’m going to record a webcam video of myself that I’ll post on Go Fund Me to raise enough money to make a decent Indiegogo video that will raise me even more money for a Kick Starter video to go for a ride on this. That’s what I’m going to do.

Leo: There you go! Bootstrap! It’s all about bootstrapping. It’s good for Etihad; it’s good for Ben Schlappig. It will operate from Abu Dhabi to London, Heathrow, starting December 2014. I want to give the guy some money just because of his chutzpah.

Larry: I don’t know if that’s the right word for that particular route but that’s okay. Wow, look at her.

Leo: Hi! I’m here! And you are in Your Residence. Come, have dinner! She seems awfully perky.

(Listening to The Residence Advertisement)

Leo: You get a Butler! Butler! Get out of here. You just lost me!

Larry: And there are people who can afford this.

Ben: Nobody’s paying for this. This is the kind of thing you set up so people can waste their stupid airline miles on it and nobody actually pays full price for it.

Leo: My suggestion is, next time bring a 12-year-old. Try to get him on the exit row. They are going to come up to you and say sorry you can’t sit here, sir, and you say, “All right, I’ll take the Residence.”

Ben: That’s a brilliant idea!

Leo: Last story of the day! I am mad.  Senator Patrick Leahy of Vermont single-handedly, with a Tweet, killed patent reform in the Senate dead. The patent trolls have won!

Brian: What?!

Leo: Yes.  The House of Representatives had overwhelmingly approved patent reform in December. It was sent to the Senate, the chairman of the Senate Judiciary committee Patrick Leahy tweeted. “We’re not going to do this, we don’t have the votes, never mind.”  Julie Samuels, who is the former EFF lawyer, is the director of Engine, a group that lobbies for startups, said "Tuesday night it was moving forward, Wednesday morning it was moving forward. Then I looked at Twitter and there was a tweet saying it was dead. What the hell?"

Larry: It’s not like Leahey was trying to kill the bill.

Leo: Leahy decided, because he’s the chairman of the committee, to table it. He unilaterally did it.

Larry: I don’t think he did it because he hates the idea. I think he did it because he didn’t have the votes to get it to pass, if I’m reading this right.

Leo: And that’s a question. He said we don’t have the votes. I would have liked it to have gone a little further in the process to see.

Ben: The Ars Technica you just showed is interesting, because it’s contending that it was actually killed by Harry Reid. And under pressure from the -

Leo: Trial lawyers and big pharm.

Ben: Which would be unfortunate. The pharmaceutical industry, I think, is certainly understandable. Although they tried to accommodate them. They are the poster child for why patents are necessary.

Leo: Yeah, we need patents! Nobody’s saying that. What we don’t want is software patents. What we don’t want is non-practicing entities to go around suing people because it’s a good way to make money.

Ben: Right.

Larry: Reuters says he still sought to address the problem

Leo: Next year.

Larry: Yeah.

Brian: Okay, first of all… I guess I’ll step up. I will be devil’s advocate here. If you didn’t have the votes, what’s so wrong about saying I don’t have the votes? That’s just a fact I assume. Right?

(All speaking at once)

Ben: That’s the issue. The contention that it was killed by lobby groups.

Leo: Never got out of committee.

Ben: And remember, this passed the House of Representatives by an overwhelming margin. It was supported by the President.

Leo: The leadership, starting at Harry Reid, killed it. The Democrats killed it. Lee, Reid and Leahy killed it. The ars technica article said that Leahy was just doing Harry Reid’s bidding. Harry is, of course, the majority leader.

Ben: I do wonder if there would be some way to get traction and explicitly - I don’t know if this is possible - but explicitly split off software from the rest of the patent system.

Leo: That may be the solution. But who makes money on these lawsuits? Really, it’s the lawyers. $29 billion last year and almost all of it went to lawyers.

Ben: Talk about incentives and it’s a very understandable approach

Leo: All they’ve got to do is take 10%, give it to Congress and everything’s fine. It’s disappointing. It’s very disappointing.

Brian: Whenever we run across something like this, I just want to hear Cory Doctorow talk about it. Because I remember listening on This Week in Tech, it must of been three years ago, where he talked about the whole idea of piracy is an intellectual venture and the 1700s of the whole reason we have patent laws. I just know in my mental Rolodex, I know that I’m dumb about this and I want to hear somebody smarter.

Leo: I will get Cory soon! The problem with Cory is he’s in Britain, and, unlike Ben, he’s not willing to get up early. Oh no I think it’s the other way around!

Ben: The problem with patents is, just to tie everything together in a bigger knot, or bow, it’s a similar thing to the Surface thing. We forgot the whole reason they exist.

Leo: Right.

Ben: The reason they exist, going back to the founding fathers – everyone knows patents are a bad thing. They reduce competition, they make things more expensive. The reason they exist is that they are an artificial monopoly. And the reason they exist is the fear that if they didn’t exist, some types of innovation would not happen. And again pharmaceutical is a great example. It takes something like seven or eight years to bring a product to market. If there weren’t patent protection, there would be no point in investing in seven or eight years.

Leo: We need patents! That’s clear.

Ben: The problem is, in software and technology, there is no need for additional competitive advantage. There such an advantage to being first to market. The whole reason that patents exist in the first place doesn’t even apply to technology. I wonder if we would get traction by going back to first principles. Like, what’s the point of patents? Okay, now we all agree that’s the point. Then it becomes super obvious that they don’t have a place in software particular, beyond the fact that software is math and you can’t patent math.

Leo: I felt like we were getting there, and I felt like this bill was one of the ways we were going to get there, but that’s dead. Cory Doctorow, by the way, to answer your question Brian brushwood, suggests the magnificent seven model for fighting patent trolls. It actually is kind of like your model. Remember, in The Magnificent Seven, the villagers were plagued by bandits every year decide that instead of giving money to the bandits they will give it to mercenaries to fight the bandits. The magnificent seven. He says what we need to do, is we need to get it Kick Starter together and have all the money that you put in to defend against patent trolls get that together on it Kick Starter and then we’re going to hire, I don’t know, Clint Eastwood, Yul Brynner, Steve McQueen and James Coburn and they will come and take care of the patent trolls.

Brian: Essentially create a Superfund.

Leo: A Superfund! Actually, can I just point you, as long as we’re talking about it.  To me, the long-term solution of the whole thing, with Larry Lessig’s MayOne campaign. Mayone.us Kick Start fundamental reform by reducing the influence of money in politics. He’s raised $1.1 million to create a super pack to end all super PACs. And I think it’s exactly the right solution. Larry remember was a guy who created creative comments. He’s been on the show many times and he finally realized he’s never going to win in anything unless we get the money out of Congress. And by creating a super pack that would then elect people who would then campaign-finance reform, we can finally maybe do something.

Larry: But at $1.153 million –

Leo: It doesn’t sound like a lot but Congress is cheaper than you think. I think that’s the really interesting thing in all of this. It doesn’t take a lot of money. So stage 2 launches next month. Keep the momentum going. If you want to know more; mayone.us.

We are out of time. And thank you everybody. It’s been a great show. Brian Brushwood. Last-minute Brian, we call him. He comes in. He rides in out of the sunset, he gets all the bad guys and rides off.

Brian: never mind that my original name was last-place Brian. So I’m glad to be last-minute Brian instead.

Leo: Always a pleasure. Skim stuff scam - I can’t say it!

Brian: scamstuff.com.

Leo: @shwood on the Twitter and Scam School and Late Night Trains.

Brian: Late Night Trains is my new –

Leo: That’s his album -

Brian: Cover

Leo: Night attack, baby. Fortified wine that leaves you feeling fine. We want to thank Ben Thompson for being here, from stratechery. I’ve been trying to get you on for ages. I had no idea you were in China. That might’ve been one of the problems. But I’m glad you got up early today.

Ben: Oh boy, you have no idea what you just stepped into. I’m in Taiwan.

Leo: Oh it’s not China, it’s Taiwan. Pardon me. The island republic.

Ben: I’m not even going there. I’ll let you do that. But yes stratechery.com and then my podcast is exponent.fm. Exponent like the math function.

Leo: And you can find that at stratechery also. And it’s brand-new! You’ve only done four episodes. This is exciting, I’m really glad you’re doing it.

Ben: We actually talked about the May One last time.

Leo: We got to fix this. Really great site. And then if you get a membership to the site, you do some interesting stuff. You’ve got a private glass board which is a great idea. And meet- ups and all sorts of stuff. So I won’t say China anymore. But they do speak Chinese there don’t they?

Ben: Yes they do.

Leo: Do have chow mein? Egg foo young?

Ben: Stop! I’m making you stop right now. Those are all like Western constructs.

Leo: I know I know. I know all that stuff. You have gai bao, you have char siew bao, you have all the good baos. I know. It’s good food. It’s just not that China. It’s the other China.

Ben: It’s actually a great place for food. There are the different parts of China. The Japanese actually controlled the island for the first 50 years of the 20^th century, so there’s a heavy Japanese influence. And the Europeans were here before, so it’s actually a very interesting mix. And from a culinary perspective, it’s excellent. One of the many advantages of living here.

Leo: I’ve wanted to go to Computex every year. Maybe this will be the year.

Ben: Well that’s next week so…

Leo: Well we better make our plans. It’s a wonderful tradeshow. Next week? I’ll never make it.

Ben: I’m actually going to miss it too, unfortunately.

Leo: You’re coming out here?

Ben: I am.

Leo: Maybe you can come up and visit us.

Ben: Well, we were up there a couple summers ago, but it was just to see Snoopy.

Leo: Snoopy is in the neighborhood. Snoopy’s just up the road a bit. Nice to see you. Thank you, Ben, for joining us. Come back soon. Thank you to Larry Magid, CTBS radio, safekids.com. Anything else?

Larry: If you go to safe kids.com right now, you’ll see that today is missing children day, so I just have a little piece up there about the National Center for Missing and Exploited Children. Everybody ought to know about that if you don’t already.

Leo: Awesome.

Larry: It’s something to think about and realize that there are still kids that need to be brought home.

Leo: It is also towel day, not to make Missing Children’s Day less important.

Larry: Towel day. I didn’t know.

Leo: But it is Towel Day. That’s an important day. It was created in 2001, two weeks after the death of Douglas Adams. He passed away May 11, 2001 and to honor him, honor The Hitchhiker’s Guide and his brilliant writing, his great sense of humor, his fans got together and created towel day. Which is celebrated May 25 every year for the last 13 years. We wore towels on the screensavers on May 25, 2001. And John is wearing his towel today. I’ve got mine in my pocket. It’s a very tiny towel.

Brian: That’s just geeksist!

Leo: Let the towels have their own day. Thank you everybody for being here. We do TWiT on Sunday afternoon at 3 PM Pacific, 6 PM Eastern time, 2200 UTC.  6 a.m Taiwan time. If you want to join us. We’d love to see you live. It’s great fun to have you in the chat room, but if can’t be there don’t worry. We make on-demand audio and video available right after the show on twit.tv and wherever you can find your favorite netcasts. Including iTunes and of course, there are some great apps. If you don’t have the twit app.  - we don’t do them, but wonderful third-party developers do them for iOS, Android, Windows phone. Get the twit app you won’t miss an episode that way. If you’d like to be in studio with us, free snacks! For some of you. Not all of you. Some of you get free snacks. Barry gets free snacks.

Larry: I want to get a five dollar discount on my razor!

Leo: Tickets at twit TV. Thanks for joining us. We’ll see you - What? What? Oh, I didn’t do any of the house ads at all. Well I’m going to let you guys go while we find out what a great week it was, because we did have fun this week on TWiT:

Our top story tonight, Microsoft is unveiling the Surface Pro three.

As impressive as it is, a very niche device. How many people want to spend premium dollars for what’s essentially a very very thin tool

Marketing mavericks! I was impressed with exactly how honest the Times was with itself. It breaks my heart for many companies have taken social media and have simply used it as another mass marketing platform instead of using it for what it’s good at.

Listening to what your customers want

Triangulation. Our final invention, artificial intelligence and the end of the human era. Holy cow!

Here is sort of a litmus test of how good AI has become. Look at the jobs it’s displacing.

Tech news today, eBay got hacked. That’s right; the company issued a statement urging users to change their passwords.

TWiT live specials

I’m father Robert Ballacer and I’m at Maker Faire 2014; the biggest show in town - on earth.

Twit – Tech just like you like it.

Leo: All that in one week! What will next week bring? Let’s see.

Chad: Coming up in the week ahead, we’ve got Re/code’s first-ever conference begins Tuesday, May 27 way it in Rancho Palosverdes. It’s called the code conference, but it’s not for developers. The three-day event is being hosted by the same people who used to run AllThingsD, Walt Mossberg and Kara Swisher. Also, this week Samsung is throwing a big healthcare technology event on Wednesday, May 28. The company isn’t planning to announce new consumer products, but the event is expected to address health care features of the future Samsung smartphones and wearables. Later that day, NBC anchor Brian Williams is scheduled to interview NSA whistleblower Edward Snowden in Moscow.

Samsung is planning to roll out its gold GalaxyS5 in the United States on Friday, May 30. The phone is nicknamed the Band-Aid phone, because it’s color and perforations make it look like a Band-Aid. Let’s see if the name sticks. Back to you, Leo.

Leo: I has opulence! I has a gold phone! Thank you everybody, we’ll see you another time - maybe next week? Another TWiT is in the can. Thank you!