Amazon and Microsoft's AI parades

23:10And they're going to do it, as far as I understand, kind of bit by bit as it goes before this all becomes sort of fully generative AI. And my understanding is that's going to take a little while. Yeah, it's going to come with the phone. It's going to come with the phone. There is this new eye gaze thing where you can just look at the displays and control them with your eyes, which is a little terrifying. A little? Amazon seems much more comfortable with the idea of putting cameras and smart assistant devices. They had a drone that you could fly around your house for security. Their concept of security and stuff is way different.

23:43What if RoboCop was in your home? There's three people in the world who are like, yes. And the rest of us are like, no. And they're listening right now. Welcome. We appreciate you. We love you. But no, Amazon is just very comfortable with the idea that these things should have cameras as well as microphones. I am hard stop at cameras. Yeah. Just no thank you. You don't want a camera owned by someone else in your bedroom at all times? No, thank you. Shocking. But you know when you ask people, would you ever put a camera in your bathroom? They're like, no. And you're like, you know you carry like seven of them in your bathroom every time you put in your phone.

24:11Every time. And there's like, yeah. And then they lie. But that's fine. And they're like, it's in my pocket the whole time. It's not. Yeah. I hide it. I wrap it in a little towel like a baby. and put it away. But wait, the camera thing is really interesting because like, I'm with you on the would not put a camera in like my bedroom. That's been a non-starter for us for forever. We don't even have any cameras in the house. But like, You have seven of them in your pocket right now. I have one right here. Like, you know what I mean. We don't have any like smart home camera things. Yeah. But, then there are questions like, okay, not a camera, but what about like a radar detector that knows when you're getting close and can change the interface so that you can use it.

24:56That's not the same, but it's not totally different either. It's like my device being aware of me all the way down to like my device can see precisely what facial expression I'm making. Somewhere on that spectrum is where I get uncomfortable and I don't know exactly where it is. But I think, and like Amazon is doing this too. They have these really interesting ideas with things like the Hub Max, the big new smart home controller about when you're far away, it should show you one thing, right? Like probably status information. It'll look like a thermostat show you temperature or whatever. As you get closer, it can start to show you more information.

25:29And when you get right up to it, it should show you buttons because that's what you're going to do when you're standing right next to it. And to do that, they have to be able to do presence detection. It has to know who you are and where you are. And full color camera for that, little much for my taste. But like, I still have not figured out where I go from like, this is a useful way to do a useful thing to like, eh, that's a little much. I like that they're trying to figure it out because the Echo itself, like the original one, was already kind of invasive and people had to reconcile that, right?

26:00Like, I'm going to have an always-on microphone in my house. That's way more than anybody had had before. Well, and the lesson learned was people got used to that really fast, right? Like Amazon was like, oh, we can just do this because it's fine. And so Amazon is clearly like trying to find, okay, what's, we have to do this presence detection. We have to do something because you cannot have a super successful smart home without some sort of like surveillance. That's just, you need it. And if you want the convenience, you're going to have to give that up. And so they're clearly trying to figure out, okay, where's most people's line?

26:29Drone that flies around your house, robot that drives around your house and gives you beer too much. Well, those are different. I would say those are different. The robot was useful. Yeah. The drone is terrifying. Was the robot useful? Well, I'm saying, well, I mean, it could have been useful, but it wasn't useful. It brings me beer. Right. I think if you can actually solve the it brings me beer problem, like a lot of people will sign up for that at under$1 ,000. Yeah, that's fair. The like – there's a drone that looks at stuff in my house. A lot of people are like, yeah, I don't know, man. Just rob the place.

27:01Like I can't be doing this. You're welcome to everything. Yeah. But I'm with you, David, that there's like some – Yeah, there's that point. It's fuzzy. Yeah. And it seems like Amazon is trying to find that point by throwing things – by doing like the limp strategy, which is like, OK, well, we're just going to release – we can afford to release things. So we're going to release things and see where that line is. I think this is the thing that will change on our Panas Pineda most. Yeah, I think he's going to have more focus. Right. Like Amazon is like, we'll put a mic and speakers in it. Alexa, light switch it, whatever.

27:32And the idea that the market would settle on an idea I think has just not come to fruition, especially because Alexa hasn't been worth it. Right. Like, man, again, I'm out here trying to buy a thermostat, man. Like, the Ecobee I want is like it has Alexa in it. I'm like, but I don't want that. You can turn it off. I never used it. But why is it even there? I don't want it. I don't know. I don't need a microphone in my thermostat, man. I'm trying to tell this to you. But then it has – whatever. It's just like – but that was the idea. We'll just like put it everywhere. I suspect Panos will bring much more focus to that program.

28:10Yeah. There's a little bit of reporting in Reuters that like morale is low in that team. I think that's to be expected with any gigantic leadership change. But I also think the sort of leadership style is about to go a dramatic change. And if you've been allowed to be like, here's what we're going to do. We're going to spend tens of million dollars on a drone that flies around your house. And then just put it out there and see what happens. Like, I suspect those days are going to come to an end. Yeah. I'm going to be sad about that. I think, Neil, the truest thing I think about your feeling about Dave Lim's tenure is that the last, like, big capital N new thing Amazon's hardware division launched was that first Echo in 2014.

28:52Yeah. No, the Echo shows, I think, were an important turn. That's fair. Okay, sure. I'll give you that. But even that, that's one and a half things in what amounts to a decade. And everything else has been sort of iterative splinters of the same idea. And I think one thing Panos Pene is very good at is being a fountain of big, new, wacky ideas. Yeah. Fire TV is in there. Actually, and Jen wrote about this, and Amazon has weirdly sort of discounted the Fire TV as the centerpiece of its smart home strategy. when it is probably by most measures the most used Amazon device in most people's lives. If you have a Fire TV in your house, it is probably the Amazon thing you interact with the most.

29:34But it's a TV, so you get it to play whatever you want and you just move on with your life. And I think there's a gap there that I think is fascinating. And they announced a new one, right? Yeah, they announced two. So they announced it's the new Fire TV 4K stick and it's going to be more powerful. It's going to be faster. It should have better Wi-Fi in it. And then there's going to be a new Fire TV Max, and that's going to have a whole – like, that's going to be more in competition with the Apple TV, which is great because Fire TVs have notoriously stayed far, far, far away from the premium end of things, which is really annoying if you want to experience it but you don't want to look at garbage on your TV.

30:15And, like, I paid for Dolby Vision. I want Dolby Vision. But, Alex, can I tell you the wildest thing about what you just described? What? Your description is exactly right. And the difference between bottom and top is$10. It's$10. Buy the fancy one, people. Like, wait for our reviews. We'll probably review them. Please buy the Macs. There are many smarter people with Verge on this stuff than I am. But I'm here to tell you, if you are going to buy one of the new Fire TV sticks, spend the$10. Get the Dolby. Get the better features. Get the faster speeds. It will last you longer. It will make you happier.

30:50It's$10.

30:55I don't understand why this other one exists. Like Amazon likes to do the thing where they're like, this one costs$5 and this one costs$50. And then I'm like, okay, these are real things. And then they discount the one really heavily on Prime Day and they'll just like give it to you anytime you put anything in your cart. Like whatever. That's all fine and good. This one is if you're going to have a$50 one that's fine and a$60 one that's very good, like what are we doing? I don't understand. Yeah. All right. Lastly, we have to talk about the Echo Frames and we gotta take a break. We do. Why did they make glasses again?

31:24So, okay. I can answer this question because I asked Dave Limp this question. Oh, good. I literally pointed at them on the table in front of him in this conference room we were sitting and talking. And I was like, smart glasses? Are these a thing? And he goes, I don't know. So, what I can tell you is true is that like the last time Amazon had this run of like weird stuff they were gonna launch, they did a ring, they did a whole bunch of other stuff all with the idea of like things you have on you all the time that might connect to Alexa, right? Most of those things didn't find an audience. They're not here.

31:57It's not an accident that like the Echo Ring 2 does not exist. The frames, he said, caught on. They're not huge. They're not earth shatteringly popular. But he said he was like, we have found a bunch of kinds of people who really love this. Outdoorsy people who have always been the target market for this, right? Like you want, you want to be able to listen to music and talk to your device without having headphones blocking you from the world, that's useful. And like, Bose is working on this kind of stuff. Meta's working on this kind of stuff. There's like this teeny tiny little but kind of growing smart glasses world that I think is sort of fascinating.

32:34But he basically was like, what we thought happened the last time was that they were severely limited by the fact that they didn't look very good. That we thought there might be more people who were interested in relatively lightweight, relatively simple glasses that let you talk to Alexa and play music, period. So with this generation, we made them nicer looking. And they are, in fact, much nicer looking. They have a bunch of different styles. They have some different lenses. They did a thing with Carrera that looked so bad when I put them on, but I'm sure will look cool on other people's faces.

33:06But they're like, I get the sense that they're like, okay, this is the good version of this product that some people seem to have caught on to already. like let's see if there really is a there there on this one. So I'm fascinated to see how well this thing actually does. I can't wait to make you review these. I'm down. I went back and looked at our old review and all of the pictures are Dieter looking very serious holding one of the stems of the glasses. It's so good. It's good. This is why I'm excited for it. I can't wait. Very serious. Can I get the same outfit too? That's Amazon. There's lots of coverage on the site.

33:39If you're into the – there's an Eero Pro Max with Wi-Fi 7, two 10-gig ports and two 2.5-gig ports. It's huge. Do you need that? It's$1 ,700 for a three-pack. It's great. I love it. You're going to buy it for sure. Like, you know, there's like – no. We have one gig internet service. Although we could get eight gig optimum service. I just couldn't figure out what for. And now I'm like, oh, it's so I can buy this router. Yeah. It's a horrible way. It's a horrible way to spend$1 ,700 is switching to optimum. No thank you. No, thank you. But it's great. The Echo Hub Max. Go look on the site. It's all fun stuff to look at.

34:17But the real news here is that this is like the end of one line of thinking. Yes. Which is just utterly fascinating to me. Yeah. And it all happened on the same day. It's great. Okay, so we're going to take a break. We're going to come back and we're going to talk about Microsoft's event, which is on the other end of all this drama. We'll be right back.

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37:11Okay, we're back. Should we do the leaks first with Microsoft or should we do the event first? Let's do the event and then we'll do the leaks because that's way more interesting and the event will seem like a super bummer if we talk about the leaks first. So Microsoft had a Surface event today. Is that fair to call it a surface event? Well, not anymore because Panos is gone. So Panos was like tweeting about this a couple weeks ago. I'm excited to be in New York, do the thing, da-da-da, show off the new surface. We've all seen these events. Yeah. One of them, he was like, I made the new surface.

37:39I made it for you, Joanna Stern, and like pointed at her. It was great. It was like an all-time great tech event moment. And she was like, me? And he's like, yes, you. It was great. He bailed on Monday. Just tweet, I'm out. Yep. And then there was a scramble. And as you said, Bloomberg reported he's going to Amazon. No one's confirming anything. There's a lot of speculation, whatever. So now Microsoft has to, like, do this event. And they scrambled up some people. Nadella showed up. Yeah. And what did they do? They said, it's all about AI now. So what happened at this event? They didn't announce the Surface Pro, but we weren't expecting that.

38:14They announced a new Surface Studio laptop. It looks cool. But they didn't talk about the plent. Remember the plent? Yeah. That was a big part of the last one. The flat part. The flat part. Plinth. It's a good word. Yeah, it's a good word. More things. You should pull over your car right now and make a list of five things you wish to describe as a plinth. And then go to wherever you're going and just say it all the time. If Panos had been there, he would have said plinth. Yeah. It would have been great. But they announced a new Surface Laptop Go 3. So that's a nice little upgrade there. And they announced a new Surface Go 4.

38:49And I love a Surface Go. That's one of my favorite devices in the world, but it's also one of the most disappointing devices in the world because it's so cute and it's so small and then it's so expensive for what it is. It's also not meant for regular humans. This is like a business device for business people, right? Didn't they explicitly pitched it to frontline workers this year? Yeah. So this year it is not going to be sold to us normal folks. You're going to have to go through your IT department or something like that. It is still going to be outrageously expensive at$550. It is still going to be outrageous.

39:20Yeah, but if you're provisioning UPS. No, but it's overpriced because it's got an Intel N200. Brutal. It's just like, y 'all, did you try? Monica got to chest it out. She was not enthusiastic. It was still, she could see the slowness of it. She and Tom. I love that this is the device you've chosen to focus on so far, Kranz. The one device that people can't buy and the worst one by far. And you're like, let's talk about that for a while. That one's my favorite because it's so cute and you're just like – It is cute. Everyone loves a cute little tablet that sucks. All right? Yeah. We've all done it.

39:55Who hasn't bought a cute little tablet that sucks? You've got four fire – like fire pads. I've had a Nexus 7 for God's sake. Okay. That didn't suck. How dare you?

40:07Some earlier, like we wrapped it in leather like a motorcycle. I was like, I love you. And I was like, hmm. Leather's nice. All right, tell me about the actual laptop studio, too. Does it have a good chip in it? This is always the crime with Surface devices. Yeah, so this was interesting because it sounds like the laptop, too, they actually put the real chip in it. They put 13th gen instead of 12th gen, which is like Microsoft's hallmark. They love to put last gen stuff in. And they're like, don't you want to pay the exact same price? No, no one wants to do that. So it was really, really nice that they did that this time.

40:41I think the GPU is still an older generation. Of course. I mean, there's always something. Oh, no, it's an RTX 4050 or an RTX 4060 GPU. So that's not too bad. And it's real pretty. The last one was really cool. Yeah. If I was going to get a Windows laptop, I would get this one. Yeah, it's the coolest one. Is it really expensive? Do most people need it? Probably not. But is it really, really, really cool? It's a MacBook Pro, right? With a plinth. This is actually a thing that the Windows ecosystem doesn't have enough of. When you get to really powerful computers, way too many of them tend to either get really big and really heavy or super gamery.

41:21And both of those things are for valid reasons, and there are real markets there. But I think one thing Microsoft correctly sussed out with this line was we need a thing that is very attractive. The size is about right for what it is, and it's powerful, and it does, like, nifty, surfacy things, like the pull forward screen that it has where it sort of comes off its hinge and you can like drape it over the keyboard is very cool. And if you're a person who uses a Surface Pen a lot, it's really useful. And it's like, that to me is I'm like, this is how you make the MacBook a touch device, Apple. Like there it is, that's the answer.

41:57But I feel like, I agree that this is not the one for most people, but like this is a good thing that should exist. And it's good that Microsoft finally got it right. I have the first laptop studio here. It's my like go-to Windows machine. and I love it to bits but anytime you try to do anything like intense on it it just kind of falls apart and I'm caught it seems like Microsoft went after this one it has more ports it has better power like it could be a win if they can get the battery life right that's going to be the question do you think as Panos was walking out the door he scratched out the previous generation processor and I was like put a good one in it he just turned the 12 into a 13 and said goodbye with a Surface Pen peace he was like I got one more thing by the good one.

42:42The most interesting thing about this event by far to me was that it took them 40 out of 60 minutes to even talk about hardware. Yeah. Like this was not a devices event in the way that we're used to. And the same was true of the Amazon event. Like both of these were events about AI, right? Like Microsoft spent the vast majority of this event talking about Copilot and the idea that you're going to have this AI assistant that works in all of your apps and on your computer and on your phone and understands everything about you and can just sort of stitch your life together in this helpful AI way.

43:14And part of it was like relaunching products we've heard a bunch about already, which was odd. They like announced a new version of Windows, but only in sort of passing as they were talking about co-pilot. Like this was a co-pilot event in which they launched hardware on which you might do co-pilot things, which I think is fascinating because there was also this Business Insider story, I believe today, Thursday, as we're recording this, about why Panos left Microsoft? And one of the answers was because he was frustrated that in this huge switch to AI, Microsoft was devaluing its hardware because it's building these things that work everywhere, and who cares about having a flagship device?

43:51It's very funny that he would then go to Amazon, which just spent a whole lot of doing the exact same thing. But clearly, that's what Microsoft is doing, right? Every big bet it's making is about AI. Well, it's kind of interesting because this also all came on the same week that there was a whole bunch of leaks about Microsoft. And in those leaks, some of those leaks were about the strategy for Microsoft. And as soon as last year, they were all sitting there. Satya was saying, we have to have a unified strategy that pushes our hardware, that pushes our software, that does it all together. And for us, it's going to be hybrid cloud computing.

44:28And so it was this whole thing about game computing and how you were going to be able to do some of the processing on the computer and some of it in the cloud. That was the whole thing. And it seems like AI kind of like has pushed that to the side. And they're like, oh, we now have a new unified vision, and it's AI. And then Panos leaves, and now it's like, okay. But the hardware, what's happening with the hardware? Yeah. There's no – like I said, it would be better if they switch places. Yeah. But no one is in charge of hardware. I mean we have a memo, and it's like some people, but they're shuffling new people into it.

44:57Dave Limp coming in to be the co-pilot guy actually makes a certain amount of sense given what he's been up to at Amazon all these years. Just drive your cars in different directions, guys. Just wave. Just like high five on the highway. Let's talk about this Copilot stuff because there's quite a bit of it. But like David said, a lot of it's been announced already. Yeah. So Windows Copilot seems like a big idea, like the computer will use your computer for you, but it also seems fairly limited. I think it's a terrifying idea. I was talking with Tom about it before we came to record the Vergecast.

45:28and we were both like, yeah, Copilot seems really cool, but how are you going to trust this AI that we don't know is finished with your spreadsheets for your Fortune 500 company? Yeah, you shouldn't do that. Don't do that. And so I really am kind of worried that their ambition to show that they are the kings of AI and they're hip and cool now and they beat Google is going to shoot them in the foot if they piss off all of... Well, I think it's important. Again, Google antitrust style is going on. Yeah. The punching bag in this trial is Bing, at least in secret. Yep. Somewhere in secret, the United States government is just punching Bing in the face.

46:04We don't know about it, but we know it's happening. We can detect that Bing is being punched in the face, but we can't actually see it. Did you hear it? Just got punched. But what is true is that Microsoft launched all this stuff with Bing. They made all this noise. Front page article in the New York Times. And Bing has gained zero market share. Yep. At least as far as anyone can tell. It hasn't gained zero, but it's gone from no one cares to no one cares. But now horny. Yeah. It's pretty weird in that room. No one goes into. It's like that car on the subway, you know? Just don't go in that one.

46:41Don't go in that one. But like that's the answer, right? It's like this stuff isn't working, so Microsoft's putting it in more and more places in the hopes that it will work. But the turn that is really interesting for me is in Windows where you're like, change my display resolution and it will just do it. That's like a meaningful – the last digital assistant that attempted to do this was Bixby. But on Windows where it is pretty Byzantine, I think that might actually make a big difference in how people use Windows. I mean Windows menus are garbage. And remember how for the longest time they all still had, like, Windows 7 UI, even though they're like, we have this new thing, and it's great, except for all of these really important menus you have to use if you're testing laptops every day, Alex Kranz.

47:25That was just for me. But, yeah, I just get so nervous about how fast they're moving on AI at Microsoft. Like, I just spend a lot of time thinking about this seems like a bad idea. It seems like you're going way too fast, and this is going to bite you in the ass. because they haven't had the ability to test this as extensively as they'd like. And that's why we're seeing, like, that's why Amazon is going kind of slow here. Even though Amazon did this big announcement and showed all this stuff, they're still going slow. And Microsoft is, like, full steam ahead on releasing this and bringing this stuff to market and putting this in everybody's hands.

47:57And it does need to be in hands, right? Like, it needs to be tested. But is the best place to test it the install base for all of the companies that currently pay you lots of money to use your software? I don't think that's the best. Well, you have to pay$30 a seat to use it in an office. Yeah. So I think that pricing is a bit of a test. I also think it's a bit of a barrier. It will keep a lot of people out. The only person who should be using AI and Excel at your company is the person who is best at Excel at this moment. To just let you know what it can and can't do. And that's actually – that's a pretty good example, right?

48:30Because I think what Microsoft would say, and I think did say at a panel they did after their event today, was basically like, don't trust this thing to do something you can't do yourself. Yes. Just trust it to help you, right? And I think that is the right, like having the Excel expert say, okay, here's this menial thing I do 100 times a day. Can the AI do it for me? It's actually a pretty useful and like instructive test. But for me to just go in and be like, hey, co-pilot, we making money or what? It's like, that's a bad idea. We shouldn't do that. You should do that all the time. I'll pay$30 a seat for you to do that.

49:10How's the money, co-pilot? And I think we're in this place now where with so much AI, it's like if you want to do dumb stuff, it's going to go poorly for you. And people will do dumb stuff, and it's going to go poorly for them. And I think there are really interesting questions to be asked about whether we should be protected from that as people. It's like it's the self-driving stuff, right? Like if you have a thing that's called a self-driving car, people are going to fall asleep and have sex in the backseat. And that is not what they should be doing, but they're going to do it. And so what's your responsibility as the one making that is a really interesting question.

49:47But I think at some point, if I'm Microsoft, you just have to like throw it out there and do your best. And I think the way they're pitching it is really interesting because it's like, it's not a tool for doing spectacular business calculations. It's like a way to play a Spotify playlist, right? It's like doing the things that are easy and tractable and you know how to do, but take 12 clicks. You can just do it with a command now. And that's the kind of stuff that this stuff is generally pretty good at. But then, like, I think Microsoft has been trying to do this with Bing all year, too, is figure out how to put a ceiling on that.

50:27Where it's like, okay, we want you to be able to do this stuff without doing all the dumb shit we know people are going to do as soon as they're allowed to. And I don't think anybody has figured out that answer yet. I don't think there is an answer to that. Like, people don't like it when you say, oh, you have all of this access to technology? You only get this little bit. No one likes that. Well, so Barb did, and it sucked. Yeah. You hate it. Yeah. Someone told me that LLMs are uniquely good at teaching you how to make chemical weapons because there's so much information about building chemical weapons on the web that they've just learned it all.

50:58And, like, now we're at the point where, like, you shouldn't let them do that. No. But, like, now it's just built into the sidebar of Windows. Now you just do it. Well, not yet. Not yet. It's coming September 26th. All right. So that was this Microsoft event. Copilot everywhere, basically. A little bit of new hardware. Then there's the other Microsoft event. The one that you weren't supposed to see, which is – and I want to be very clear about this because there is some narrative out there. The FTC leaked Microsoft documents. That is absolutely not what happened. So FTC versus Microsoft happens.

51:31Lots and lots of documents are getting uploaded. We can see them all in the docket. The court clarifies Microsoft was asked to do some stuff, failed to redact these documents, just published them for everyone to see. So Microsoft is like screwed up in a massive way here. I mean I'm not complaining. No one's complaining, but the leaks are out of control. There's a new Xbox Series X, another new Xbox, a new controller, Phil Spencer idly wanting to buy Nintendo. Where to begin? The controller? Yeah. Yes. Yeah. Yes, Alex. The controller is cool. Yes. Right? It's got the haptics like the PS5 controller, so it'll feel like more real when you do stuff.

52:11I don't know if all of our listeners have a PS5. Buy one. It's a lot easier now. I'm going to spend that$500. But the haptics feel really cool in it. And this is supposed to have that. It's supposed to be kind of like Stadia where it's got like those haptics also double as like volume. It's like if you're getting shot at or something, you'll still feel it and hear it. That's just cool. Like, I don't know. It's just a neat controller. It's going to have replaceable joysticks out of the box. Right now you have to spend like, what,$250 for a Microsoft Elite controller or something from Scuf or something.

52:44And you won't have to do that. It'll just be there. And if you want to replace the joysticks because you like dig in and kind of distort them because you play too hard. I don't know anybody who does that. But if you do, you'll be able to replace it. That's neat. Yeah. It's a cool controller. And also, I think the vision behind it is super rad, which is basically like Microsoft is in this place now where they want you to be able to play all of your games all of the places, right? Like it's cloud gaming is a huge part of this. There was a leak in here that Microsoft is planning to stream PC games through cloud gaming.

53:16And there's this line in the roadmap document that came out that says, controller becomes the hero. The new Xbox controller is the only thing you need to play on every device. And the idea is that the controller connects to Wi-Fi itself or to your console or over Bluetooth. And so it becomes the console in a super real way. and all you need is a screen and a controller and suddenly you're up and running. It's a very like Stadia vision of the world. And I think that was the single smartest thing about Stadia that ever existed. And I think this idea of like the controller being the thing and you can play anywhere as long as you have the controller is so cool.

53:54And I really hope it becomes real. I really, like that's the thing that I really hope this AI stuff that Microsoft is focused on doesn't distract that much from the cloud gaming things that they're doing because it's so cool. So in these leaks over and over again, And Microsoft is like the Xbox is our play for the consumer. Yeah. They're not shy about it. Yeah. Phil Spencer is like this is the thing that we do for the consumer. And like Nadella is like this is the thing we do for a consumer. And also it all runs on Azure. So just like keep that in mind. Yeah. That's where the money is, Phil. Don't get too ahead of yourself.

54:30So that's the controller. Tell me about these consoles. Just free. Like that's a big deal, I guess, for the Xbox Series X. because the original one had the disc player, separates it from a lot of the other stuff, including PlayStation. Most people don't actually need or want the disc player. Like, it's great if you want to watch movies. I have a digital PS5 and just never comes up. Yeah. Most people just go, and more storage, which is crucial. I think it's going from one terabyte to two terabytes. Theoretically, obviously this is leaked. It could totally change before it comes to market, if it comes to market.

55:04But yeah, and it sounds like there's another Microsoft Elite controller in the works, which I'm really curious to see how it's going to build on this leaked cloud gaming controller. Like, just seems cool as hell. It does. There's also apparently an Xbox that has been planned for 2028. And we should say, by the way, that these are all older documents that may or may not exist in the current reality. A lot of stuff people were planning a couple of years ago when Bitcoin was a billion dollars and money was free and everything was fantastic. The vibes are very different now and people have made very different plans.

55:42And we've seen some of this stuff already canceled. By the way, in the grand scheme of leaks, the best leak to get is the email about the leaks that leaks. Yes. So Phil Spencer emailed the Xbox team. Tom got it. Yeah. And Phil says to the Xbox team, I know this is disappointing. even if many of the documents are over a year old and our plans have evolved. Right. But let me just say, so the one other Xbox that was... Now back to the real stuff. Who cares? Whatever. Let's assume all of this is real, because I want most of it to be, because it seems very cool. There's this plan for a whole new, it seems, generation of consoles in 2028 that is basically, I think they call it a hybrid gaming platform.

56:23Yeah, this was what we were talking about earlier in the show. So they want to basically have it so the really big processing, the really hard stuff happens in the cloud. And then we do some of the other stuff smaller locally. And we've heard this talked about before. Sean's written about it. I definitely have said on this show it's stupid and will never happen. I guess I'm wrong. That's totally fine. And it's a really compelling idea if they can make it work. But it's going to require like a bunch – like they talk about this in their roadmap and in the story that Sean wrote about this, that it is a really complex issue.

56:57There's a lot of like silicone stuff that they have to do, a lot of processor stuff they have to figure out that will make it really, really tricky. But if it works, then you can have like the really expensive quality of a PC, like, you know, those$3 ,000 PC rigs that people do, 4K, gorgeous, everything turned to ultra. You could have that on an Xbox, which is currently totally incapable of that. And you could have it at that Xbox price. and that would be very compelling for a lot of people. Or even further down, I mean, there's a line in one of those documents that says they want to sell something for under$99 as like a handheld device.

57:35And if anyone ever gets this right, it basically means anything with a screen becomes a powerful gaming system. And if you have more local power, it'll do more locally and so you'll get a slightly better experience. If you have less power, it'll do more in the cloud so you'll have a slightly worse experience but still get functionally the same thing. And if we get to the, like, holy God, is that a hard technical thing to do for so, so, so many reasons. But if we get there, that kicks ass. Like that is the future of how we use computers that I would very much like to live in. I mean, it's essentially the, like, Kindle-ling of Xbox where— You can play games on your Kindle.

58:15Anything with a screen, bro. We're just trying to get you some hardware so that you can actually go do what we want you to do, which is buy a lot of games, spend money in our marketplaces. That's always been the big get for Sony and for Microsoft. And moving into that cloud gaming would really, like making cloud gaming actually succeed in this fashion would do that. Because, okay, I spend$100 and I get the exact same, like a very similar experience to my friend who spent$500 or my friend who spent$3 ,000 and built it all himself. Like just makes things a lot more equitable. So what's funny about all of this, there's all this happening.

58:52Microsoft's running ahead with these plans. Contextually, right now, Apple's like, the phone is the best game console ever made. iPhone 15 Pro is best, right? And they're all local all the time. And Microsoft can never put a cloud gaming service on the iPhone for like a billion different reasons. Through the web browser. Through the web browser. Fine. Go through Safari. That's like one pressure on this. Yeah. Then the other pressure is that Nintendo exists. and Nintendo's relationship with the internet is shaky. Nintendo knows the internet exists. It acknowledges – Yeah. Yeah, I was about to say.

59:25It knows it exists. Does it want to use it? No. It took so long to get to cloud gaming. I think it was like last year or the year before that. Yeah. Before it was finally like you can save things on the cloud and use it on your news. I'm just saying look at the structure of the game industry right now. The structure of the games on the iPhone. Yeah. All Candy Crush, free-to-plays, DLCs, the whole thing. Nintendo biggest game of the century in Tears of the Kingdom announces it will not have a DLC because it is complete and just an incredible like beautiful the flex that that is is so so powerful like what more do you want we don't need to make more money off this game the last line was like keep exploring Hyrule it's like hell yeah Nintendo it's like you haven't found out of it but it's like just incredible weird competitive pressures right that are nothing to do with this like hybrid future computing idea.

1:00:17One, Apple's like, it's all local and you, no, no thank you, sir. And Nintendo's like, what? Put his internet. Please continue exploring on our console that has like the processing power of like a mid-range HTC phone from 2011. Like whatever, you know? So then just I'm putting that in context to tell you about this email from Phil Spencer where he's like, buying Nintendo would be a career moment. He says, I totally agree that Nintendo is the, capital V, prime asset for us in gaming, and today gaming is our most likely path to consumer relevance. I've had numerous conversations with what we think is LT.

1:00:55I've had numerous conversations with the leadership team of Nintendo about tighter collaboration and feel like if any U.S. company would have a chance with Nintendo, we are probably in the best position. the unfortunate situation or fortunate for Nintendo he says in parentheses is that they're sitting on a big pile of cash and they have a board of directors that until recently has not pushed for further increases in market growth or stock appreciation the problem with Nintendo is that Nintendo's good yeah they're like Nintendo's a bunch of money and the people who run it are like pretty happy with it it's like okay good luck it's the most like ruthless capitalist VC funded thing I've ever heard in my life.

1:01:37They're like, you don't want my money? What do I do? Yeah. It's like your board of directors. So then he's like, this guy's been buying up shares and hopefully he'll do it. And he's like, we've shown the full write-up on Nintendo and Valve, interestingly, to the Microsoft board of directors and they're fully supportive of SMI. But it's just like all this stuff, all this technology stuff just sort of falls down in the face of, well, the biggest platform on earth and mobile they can't do the thing with. And then the best game platform is just like whatever. Like focus on the games. That's why they've been pretty actively on Epic's side for every single one of these Google and Apple v.

1:02:19Epic trials. By the way, when I say the best game, don't come for me. I'm quoting Phil Spencer saying Nintendo is the prime asset for us in gaming today. That's what the head of Xbox thinks about Nintendo, not me. I play Madden and I quit playing Zelda right when I got to Ganon because I didn't want to grind for shit so I could beat him. Which apparently is like extraordinarily common in this game. I think that's most people. Yeah. I only did it in like – it was like late at night one day and I went, okay, I'm just going to do it. Why not? Let's just go. I was like, look, I have a job. I'm not going to go look for fruit to kill this guy.

1:02:54Like whatever. You just know that I could, Ganon. And I shut down my Switch and I walked away. Never touched it again. But I just think that's a weird position for this, especially because of a third-place console. I don't necessarily think it's a weird position because I think they are really – like they have a strategy to deal with Apple. And their strategy is to say Epic, fix it. And they've put a lot of effort into that, right? Like they've been on Epic's side for the majority of both of these trials saying, no, no, they're right because they need cloud gaming to appear on these platforms.

1:03:29And they have their workaround now with streaming and stuff like that. And Apple's doing its whole gaming thing. But Apple's gaming thing, as much as it says it's where gaming happens, game developers have different feelings. We're starting to get the emails from the iPhone gamers. Yeah. They're there. They're starting to come in. They're there. And you guys exist. And I love you. But like, you're not like. Wow. Yeah. Watch it. You're different. We got to take a break. Yeah, we got to take a break. We're going to come back and talk about YouTube and do a little lightly run. Send all of your feelings about that to Nilay.

1:04:02No, thank you. Nilay Patel at TheVirge.com. Look, here's what I know. You can talk about Android gamers all you want because they don't exist. You mentioned that it's silly that Apple thinks the word pro means mobile gaming and the emails come. And I know you guys, you can use the controller and you can play it. And I think that's great. I want to use my phone for phone stuff. I don't want to use it for game stuff. That's why I've got a Switch and 40 ,000 other consoles. Get with the program. I just would like it on the record that everything Alex just said is wrong. And I do not agree with it.

1:04:33And I would not like to be associated with the emails that you're going to send. Come at me. You're all incorrect. I have a family. We're taking a break.

1:04:44All right.

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1:07:09All right, we're back. Should we do this YouTube thing very quickly and then do a lightning round? Yeah, we can do it fast. Yeah. So YouTube had an event today made on YouTube. A bunch of influencers. Told Charlie Puth was there. Mia, who went, told me that photos and videos were not allowed. and then Charlie Puth came out and all decorum went to the woods. And people were just like, I'm doing it. And he was like, what about a song that went like this? Like he did a thing. Charlie Puth, it's great. Nature is original creator. That's the call, right? I've been trying to profile Charlie Puth for like four years.

1:07:41Charlie, if you're listening, get at me. Let's do this. Yeah. We're in for it. Our people will obey the no photos and videos rule. Or will they? See, every pitch needs a little danger in it Alright, so they announced a bunch of AI stuff Big theme of all these events, AI stuff So this is Google's turn, right, with YouTube So Dream Screen, which lets you create a background for shorts Generative AI They showed a bunch of silly stuff Mia asked a bunch of questions about what the guardrails on that would be For example, what if you ask it to generate a background for YouTube shorts That violates YouTube's policies I just thought of four It's not hard for example what if you would like say a Dukes of Hazzard themed background for a YouTube short I went in a different direction but yeah yeah it's just like that's a even that's just a challenging question for a million horrible reasons so many but so it goes so YouTube has to figure that out they said it won't do any of that stuff but we'll see so that's really interesting David you were quite taken with DreamScreen I think it's really interesting I think this question of how do you give creators tools to use generative AI without giving them tools to make so much awful generated crap that it ruins your platform is like the question of the internet right now.

1:09:03And it's one we've talked about a lot. And I think YouTube is way behind on giving its creators native tools to make things. And this is a way to get into that. I just think is really interesting. And like starting with backgrounds is clever, but there's also a thing where the AI tools in the YouTube studio will start to generate topic ideas for creators that it says are personalized to the things that those creators are doing that already work. So like I have a thousand things I hate about that, but I think it's fascinating. And we're in this place now where like everybody is trying to like relentlessly game the algorithm to be successful on YouTube.

1:09:38And now the algorithm is just going to tell you what to do. Yes. This is the thing. This is the most incredible announcement of the entire thing. And it was buried, right? They did DreamScreen. They did the new editor on mobile, which is basically CapCut. It's called YouTube Create. The only thing to say about that is it's bonkers that that didn't exist a decade ago. They had a thing, YouTube Capture, whatever it was called. It was just really bad and it doesn't count, right? Yeah. It is nuts, by the way. YouTube is the platform it is. And basically Final Cut Pro and iMovie and Adobe Premiere are the native creation tools for YouTube.

1:10:14Like, that's crazy. It predates phones being like the primary computing device for people. Yeah, but we've been doing this a while now. But sorry, Neel, I derailed you. What were you about to say? So this thing, this automated AI insights thing, I am obsessed with it. They buried it, right? It's not like the big flashy consumer feature. But basically, if I'm getting it right, YouTube is going to look at a creator's analytics. They're going to say, here's what's working well for you. Then they're going to look at everyone else's analytics and say, hey, inside of your library of stuff, you should make more stuff like this because it performs better for all the other people.

1:10:50Which is – right. There's a universe in which creators could hire analytics people. You can get there. Right. And like big media companies have analytics people that do this stuff. But then there's just the robot telling people, make this stuff to get views. Well, and I mean, we've been through this in so many sort of specific instances, right? Like the Johnny Depp Amber Heard trial was one where all kinds of people just started doing that because it was obvious that's how you get views. This robot is just going to tell everybody to make Mr. Beast videos. Like that's just what it's going to be.

1:11:22We don't know. Will it be mouth open or closed on the thumbnail? Unbelievable question. If Mr. Beast isn't getting a cut of this for being the one like training at the best with the best stuff, it's a real shame. But no, I think you're right. And I think this question of whether YouTube can build a system that is like creative and personalized and helpful, or if it's just going to tell people to do more of what's already working everywhere on YouTube until everybody is doing the same thing with the same generative AI tools and the same music library that looks the same, like unclear. Unclear. Kind of feels like it's going to be that given our extensive history with every other push in social media based on algorithms.

1:12:04Time remains undefeated. Okay. And people get older. It's true. These kids. I hate it, but true. Yeah. And people get bored. And so, you know, I am a firm believer that data can only tell you about the past. This is like what I believe in my heart. if we followed our own analytics, we would only cover the iPhone. Yes. That's all we would do. We're not doing that. I know you're mad at me for saying it. The end of this virtual has gotten real spiky. But I promise you, if I just did what people clicked on, we would write about the iPhone 5, fine-moving case 500 times a day and Elon Musk for the rest of our lives.

1:12:42And we don't do it because we're bored. We don't want to do it. There's a thing here that we do where we decide what we're going to do. But if you're fully analytics-driven, that's a narrowing, right? It's just the aperture of your interest just falls down and eventually you just make one thing. And I think most YouTubers are people and they have that instinct where they push against it. But then there's a lot of people who are there to just make money. Yeah. My big concern here is the people who want to make money tend to be really good at it and they tend to dominate the algorithm. and then what we saw with Facebook, what we saw with even Google SEO is over and over and over again.

1:13:21The thing that rises to the top isn't the quality stuff. It's the algorithmic garbage. Like David said at the very beginning, this is the thing that kills your platform. Like the dream screen generative AI background is not the thing that kills YouTube. The AI-powered analytics that flattens all of YouTube and the people just fighting for the same kinds of attention. Well, on the other end is like people as an audience. And if you only get one kind of thing from the platform, eventually the audience gets bored too. Yeah. And I don't, I don't know that YouTube has contended with that cycle or which I think is a fair approach for YouTube.

1:13:56They're just like, it'll be fine because there's enough people who want to be YouTubers. Well, and the, the optimistic take on this for YouTube would be that YouTube is not just one thing, right? Like you can be a guy who stands in front of your furnace and tells people how to use it and like make a career out of being a YouTuber. And to that person, if this tool is any good, it's going to suggest new ways to make videos about furnaces. Right. But it's like, if, if we get to the point where every creator on YouTube is just being told to like go live stream Taylor Swift's Eras tour, because that's how you make money on YouTube at this moment in time, we're hosed.

1:14:30And it's a perfectly plausible reality that that's where we land. Do you think they start to change the surfacing though for for like what you actually see like will it be harder to find the guy who does the furthest videos well no because that's search you know and like i don't know i just think that this thing like these recommendation algorithms these these metrics drive the dynamics of the platform more than anyone ever really wants to admit and so here the platform is going to start interpreting the metrics for you and that's like some crazy shit's about to happen. It's exciting in one way.

1:15:07It's also just like, I hope you're ready for it. All right, let's do a really fast lightning round and then we got to get out of the studio. Yeah, there's like 40 more tech events to go to. Yeah, we're busy. My lightning round is, I'm going to selfishly say, go read my blog I wrote about how the future of cable bundling is here, which is a David headline, by the way. That's pretty good. Beautiful David headline. Oh, and it's so here. By the way, we are hearing rumors that the strikes might be over soon. We are. Yeah, they were saying as soon as today, but it is now. We're recording. It's about 4 p.m.

1:15:37We haven't heard anything. We'll see. All right, David, what's yours? Mine is the Google Bard chatbot can now integrate with your Gmail and Docs and Google Drive and actually go find information for you in your other apps. And you look at that and it's like, oh, scary privacy stuff. It's like, my guys, it's all Google. They all have it anyway. Don't worry about it. And genuinely, I have found it's totally useless in some ways. But in the thing where you're like, I have an email about a thing. I don't really remember. But can you find that email for me? It is like surprisingly good as a resource to just dig through all my crap and find that one thing I was looking for.

1:16:15So this is the time where I'm like, okay, this is like a digital assistant that we're actually making into something. It's still Bard, so it's still not very good. but this was like the first step forward I've seen for Bard where I'm like, all right, there's something here. All right. I've done enough big thinky-thinks on this episode. My lightning round is that I'm sitting here holding an iPhone 15 Pro in a fine-loving case, and my initials are fully scratched into the back of this case. I can see them. And it's not great. It's as bad as advertised, really? It's as bad as advertised. I mean, it's fine, but it's not great.

1:16:47It's fine-loving. I want to see you eat fried chicken and then pick it up. No, thank you. It's all I want. All right, that's it. That's the Vergecast. September continues. Next week, we're at the Code Conference. We'll have links, lots of coverage, lots of stuff continues to go down here in the craziest September of my career as a tech journalist. That's it. We got to go. Rock and roll.

1:17:11And that's a wrap for Vergecast this week. We'd love to hear from you. Shoot us an email at vergecast at theverge.com. The Vergecast is a production of The Verge and the Vox Media Podcast Network. The show is produced by me, Liam James, and our Senior Audio Director, Andrew Marino. Our Editorial Director is Brooke Minters. That's it. We'll see you next week.

1:17:43The Limo Emu

1:18:00natural ally Doug. Uh, Lemu? Is that guy with the binoculars watching us? Cut the camera! They see us! Only pay for what you need at libertymutual.com Liberty, Liberty, Liberty Liberty! Savings vary. Underwritten by Liberty Mutual Insurance Company and affiliates. Excludes Massachusetts.