SMARTPHONES DISRUPTED: TARIFFS, TRENDS & TURMOIL - BRYAN MA

CRA: Bryan Ma. Welcome back to the TechBurst Talks podcast. BMa: Hey Charles. Good to see you. CRA: How's everything going in Singapore today? BMa: Yeah. Good. , Wish you were still here. CRA: I know it's kinda lonely without you, but at least we had a week and a half together in Singapore, so it's a good start. So today we're gonna get our annual update from you on what's the latest with smartphones and devices. And there's one thing that's on everybody's mind, which is the tariff situation. So we're gonna cover that. But also, you were in Taipei last week for compute text, so we'll get some insights about what's going on there as well. And the one I want to start with is this whole China situation with the tariffs. And initially the US said they were going to increase tariffs on smartphones and components. Up to 145%. They then reduced that down to 30% and then China lowered theirs as well. So the market loved that. It was great news, but really what did you think of that announcement? Did it really matter that much for the device manufacturers? BMa: No, because the devices were already exempt. Right. Actually a [00:01:00] few days after that whole 145% deal they already said as part of this whole semiconductor effort that it was. Mostly exempt. It's, they're still subject to a 20% baseline tariff or fentanyl tariff. But I think maybe back to your question though, the reason why the markets breathed such a big sigh of relief after this most recent deal in May and early May. Despite the fact that, electronics coming in from China were already partially exempt. The reason is because of course clarity, right? Finally, like an encouraging sign that, oh, there's progress that can be made in this trade war. These parties can come to an agreement, even if it's still 20, 30%, whatever it might be, and still some uncertainty, but at least it's not as uncertain as things were back in April, right? You remember back in April. When Liberation Day came around and then you know, 90 day pause and whatever, this and that, it was kinda like every other day everyone was like, oh my gosh, what is going on? What's going to be next? And there was just so [00:02:00] much confidence that was sapped from the industry . so I think in that transition period. In fact, if we look at this entire tariff spectrum, it was, we started back in February at 10%. Moved to March. It was like 20% go into April. It was all sorts of craziness. And then finally by May, it was kinda like. Ah, okay. At least there's something clear, a little more clear. Now, granted, we're not outta the woods. There's still, that day 91 is still approaching as we start getting to July, but at least the early signs that we saw from May where that, okay, there's a little more clarity now and there, maybe there are some agreements that can be made. As far as the electronics go, don't forget, the electronics are largely exempt. And by the way, a lot of these vendors are steering around this anyway, by shifting manufacturing elsewhere. But the other thing to keep in mind too is that it's not just about the direct impact to the prices from the tariffs. The other thing is just the broader economic impact to everything that's [00:03:00] going on when businesses, fast moving consumer goods, furniture, automotive, whatever. Aren't sure where those tariffs gonna land and how they have to adjust their supply chain. That negatively impacts purchasing decisions, not just for the IT departments of these businesses, but the employees who don't know where their next paycheck is going to be as an individual consumer looking to buy. So those are the things that we need to keep in minus not just the impact to the tariffs or the tariff impact of the prices of the products, but also from a demand side, if you will. CRA: And I think the uncertainty is the key here, and it's just been skyrocketing since , all these tariff situations and the threat of trade wars, because we're at record levels of uncertainty when it comes to trade and economic policy right now, and that's seeping down to the consumer. So who knows where the demand's gonna come from, and would you really want to buy a new phone now if you don't know what it's gonna cost? But I wanted to go a little bit more into what the OEMs were doing. 'Cause we talked about this when we were together in Singapore a couple weeks ago. Yes. Apple's strategy was, had a pretty quick workaround to this. So what did, what was Apple going to do to get around the situation [00:04:00] with the tariffs in China? BMa: Sure. So Apple's been pretty good, much more nimble than I thought they would be in working with its suppliers to redirect its US-bound products. From locations like Vietnam instead or India for that matter, right? India for iPhones and then Vietnam for Macs and other products. So, in that sense, at least back then, right? They did their earnings call at the end of April back when they were talking about this at that time. This was something where we were looking at basically they could effectively get around this China tariff, or rather the tariff that the US imposed on products coming from China because they were able to get their products through Vietnam or India. And India is a good example for the iPhones. You may have seen some headlines on this, right? About them airlifting a bunch of products out of India and redirecting them to the us. Keep in mind that. Apple has already been manufacturing in India for quite a while now. A good part of that is for the domestic market. But a good part of that is [00:05:00] also for the EMEA region, right? Europe, middle East, Africa region. And what ended up happening then is, and we were seeing this in a lot of the shipment records too, was that, hey, you know what? They were able to re-divert a lot of those units that were meant for export from India over to the EMEA region. They were able to point him to the US and get him over there. Especially in that scramble when, back in that April timeframe where there was a lot of uncertainty on what was happening. So that basically is what they've been doing. They've been redirecting a lot of these volumes through other countries CRA: and some of the other OEMs, like obviously I don't think Samsung's manufacturing too much out of China. They do a lot of it out of Vietnam. I did, I checked the numbers on this, so depending on which stat you use. Samsung accounts for between 20 and 30% of the GDP coming out of Vietnam. So if you add that with Apple as well, you gotta think at some point the US is gonna go, wait a minute, we gotta start putting tariffs on Vietnam. But what about someone like Samsung sign? How are they gonna be impacted, do you think? BMa: Yeah, exactly. So Samsung, as you rightly pointed out, they've been in Vietnam for a very long time, [00:06:00] right in northern Vietnam, outside of Hanoi. But I guess what was interesting, maybe to tie your point about Samsung and Apple together I guess what's interesting is even if they're directing things outta Vietnam, as you may have heard Trump over the past weekend or at the tail end of last week. Basically he was telling Tim Cook that, even if you're routing stuff over to India, or if somebody like Samsung is routing through Vietnam, Trump wants stuff built in the US not being diverted to another country like India and Vietnam. Right. For any iPhone or an equivalent Samsung phone that is. It doesn't matter if it's being built in India, Vietnam, I'm gonna hit it with 25% as long as it's not made in the US and which is quite interesting as well, and I don't think I've CRA: seen this before, where they're actually targeting individual companies with tariffs like this, and especially a domestic brand. They're actually gonna harm that brand by doing it. But there were all these examples that came out after the initial announcements about how if you're trying to actually manufacture an iPhone in the us, the costs. For the building materials of it would go up from $850 [00:07:00] to 3,500 per phone. Now I'm sure that's an exaggeration and it's a lot of it's just clickbait and gaslighting. But I mean, does Apple have any manufacturing in the US right now that could help them with this where they could easily transition over and if not, like how long would this take for them to actually build the manufacturer? It there? BMa: Yeah, totally. It depends on how you define the manufacturing. They do have a plant in Texas doing like a high-end max desktop Macs but it's quite limited, so, the shorter answers to your questions are that yes, we've seen estimates from anywhere, from just three months time to set everything up. If we're talking about just very, very limited, simple kind of manufacturing, like basically all the finish, the last steps that you do through the manufacturing process, but more realistically probably about a year and a half, two years to. Get the factory set up, get people hired, get everyone trained, do all the quality control, all that kind of stuff. It's quite a bit of an effort if we're really talking about full on manufacturing and assembly going on there. It's [00:08:00] not an easy undertaking. It certainly does add cost and maybe to your example, regardless if it ends up being a $3,000 iPhone or only even $2,000 iPhone. It's still quite different from a 1000 ish dollars iPhone. There's pricing pressure upwards. I think what does get interesting is, if the cost really is so high, let's just assume if we were to manufacture something in the US it does hit like a $2000ish kind of a price point. Maybe in that sense that 25% coming out of India or Vietnam isn't that bad. . Granted it's still an increase, but we have to keep in mind, particularly the iPhones and for us buyers, most of these are, I wouldn't say Telco subsidized, but you basically pay on installment plans in the US for phone. So it. It wouldn't be as bad, but yes, of course. I don't want to understate or undermine how significant it is. It's still pressure on the price of the product and that of course is gonna be the challenge. I think that they will ultimately still come to a resolution, which won't be so bad in the [00:09:00] end. I think that Tim Cook very well knows that, Trump needs a victory here. He needs to be able to say, yes, this is what I was able to achieve. Now whether that means an iPhone or all iPhones being manufactured in the US completely. Probably not gonna be that extreme. Maybe it'll be certain things like, oh, we will do final assembly of some of the more premium products here, or maybe if it's not even iPhones. Maybe to my earlier point about how they already assemble very high-end max in Texas, right? They can do some of this because those are premium products already, right? So given the high cost of labor in the US that price point was already high in the first place. So what if the resolution here is that? Tim Cook says, okay, well, we'll manufacture the high-end products in the US or do final assembly, or whatever it might be. We'll see where this goes. I know I'm oversimplifying this because the problem with doing the high-end products in the US is. You need a lot of the component suppliers in China to help with that. CRA: I get worried about this because I do think they're gonna force [00:10:00] Apple to create a manufacturing facility there. Yeah. Which will not be best of breed as far as capabilities and skill sets or price points. So basically what you're gonna do is add a lot into the cost structure of Apple overall, and let's just say they do. A third here, a third in India, a third in China. To keep it simple, you're suddenly adding a lot of costs to that, which will then, I'll have to increase the prices globally for this. Yeah. Or at least in the us And I think that's the big risk on this. But I do agree they will probably come up with some kind of a resolution. He needs a win more than he needs anything else. So he just wants to say, yes, I forced them to pay billions to put together a manufacturing plant and that's good for America. But I mean, trust me, I, I don't feel overly confident about getting a really high end technical product. Coming outta the US with our manufacturing right now. We should move on from this 'cause we could just talk about this one forever, but Sure. Now let's go take a look at some of the other smartphone manufacturers. So, does this actually create an opportunity maybe for some of the Chinese manufacturers to go to other parts of the world where maybe there's gonna be a little bit of anti-American sentiment or it could be eventually anti-Apple sentiment Or is [00:11:00] China's market for their devices still gonna be local? You. BMa: Well, the Chinese vendors are already quite aggressive in markets like Western Europe. And increasingly more in Latin America. Of course, here in Southeast Asia they're quite big as well too. So they've already been doing so, but you notice out of that list of geographies that I just rattled off didn't include the us Right. Because the Chinese vendors generally are not in the us. There's a few here and there. There's Motorola, which is owned by Lenovo. Yeah. There's a smaller vendor called Blu and a few others. But generally the, the oppo Vivo xiaomi basically. Yeah. The big Chinese vendors and Honor, which is the Huawei spinoff. They're basically not in the us. And so in that sense, they're not as affected by this right now. And a lot of this is really about Apple and Samsung. CRA: Okay, now we've talked about the smartphone side. Yeah. What about from the PC perspective? So what is this gonna potentially do to the cost of a pc and does it have a bigger impact on PCs than smartphones? Or is it the other way around? BMa: No, very much so. I'm glad you brought it up because yes, the impact is [00:12:00] bigger on the PC side. PCs, you have more units being built in China rather than overseas, and that's mainly because of. Well, the assembly and the design of the products, right? PCs are bigger, there are more discreet components, and so in order to assemble a PC overseas, you've got to be able to move the, a broader ecosystem of component vendors along with you. Otherwise, the logistics cost of getting some little. Obscure component together becomes too expensive. Whereas a smartphone, because it's so much smaller, everything is integrated into an SOC, right? A system on ship where you can integrate a lot of the various components and you have what's known as a semi knockdown. Basically assembly. Which makes it easier to assemble smartphones relatively easier to assemble a smartphone outside of China than it is for PCs. Now, it's not to say that the PC vendors haven't been taking steps to mitigate this. Dell was already quite aggressive. Even I think they realized during the pandemic as well too, they needed the so-called China+1 strategy. So they were [00:13:00] already quite aggressive. In moving a lot of their supply chain over to Vietnam. Now in that sense, you have other vendors like HP and Lenovo and so forth who are further behind Dell, but HP has been impressively nimble in being able to move its products as well. HP in its most recent earnings call said that 90% of their US bound products by the end of this year were gonna be made outside of China. So they've been able to leverage, I think Thailand and the, and some other Southeast Asian countries in the process. Asus, as another example, has also been able to leverage. Southeast Asia. And Lenovo is still a bit of that question mark, but they even in their most recent earnings call last week have been talking about how nimble their supply chains are in being able to reroute and possibly through Mexico or wherever it might be. So the PC vendors, back to your question, yeah, the PCs are harder than phones to do overseas, but it doesn't mean that the PC vendors are standing still either. They've been able to. [00:14:00] Rather impressively move a lot of this already. CRA: So I know that the US strategy for doing this is to bring a lot of manufacturing back to the us but I do think it also creates quite a bit of opportunity. I mean, just the list of countries that you were talking about there. Where people are starting to ship their manufacturing. So it's China plus one. Do you think you're gonna see a lot more going into Southeast Asia and into India and is that, could that really be a boom for those economies? BMa: Yeah, well, certainly. So, yes, we are, we've already been seeing this right over the past, good number of years moving to Indonesia, for instance. And a lot of the local governments are helping to facilitate this, that's actually what held up iPhone sixteens going into Indonesia earlier this year. They find the Indonesian government basically said, okay, we want you to basically do more here in this country. Right? Whether it's building AirPods or hiring more software developers like. Basically Apple was doing previously in previous years to keep the Indonesian government happy, or at least training software developers, I should say, is probably the more accurate way of putting that. So yes, we are seeing more of that momentum. And [00:15:00] by the way, it's not just Asia. You look at all the stuff that's happening in countries like Brasil in Mexico and Latin America, in Eastern Europe and so forth. Supply chains are quite global and Lenovo always makes a good point of this as well too, that they have manufacturing in locations all around the world. In fact, most tech vendors, including Intel and others, generally try to talk about this point. So there's increasingly more and more of this momentum happening. And to your point, yes, it theoretically can help with the economies as well too. You talked about Samsung earlier with Vietnam and what a big contribution they make to GDP. It's not just tech either. Don't forget, like as. As things like furniture and automotive and all these other products potentially start to get manufactured out of Southeast, or sorry, out of China, most likely Southeast Asia in a lot of cases. There's some upside in this. If this can help drive economies in Southeast Asia, get consumer spending more, get businesses spending more, in theory, there's some upside to this, but I say, [00:16:00] I preface that, I qualify that comment saying in theory because again, it could be just as easily the next day when we realised ah, you know what? The US government is not happy about that either, and. BAM tariff on this country or that country, and then suddenly everything collapses. So, CRA: and he did already hit some of the Southeast Asian countries with some pretty high tariffs. But BMa: yeah, CRA: We should move on from that. I wanna go on to one of my other favorite most interesting buzzwords. So last year there was a lot of hype around AI PCs. BMa: Yep. CRA: But I haven't heard that much about it. You were just at Computex Yep. What's your take on that right now? Is it still a thing or is it just something, is this like the next metaverse-type concept that's gonna just fizzle away? BMa: Yeah. I don't think it's gonna be that fluffy, like metaverse AI PCs are definitely still happening. In fact, we still continue to see, if you, the way we define it is based upon the presence of an NPU. This is basically a local AI accelerator, a portion of the chip that's optimized for AI workloads on device. As we look at the likes of Intel AMD and Qualcomm, they're definitely still pushing these products, which is good. To the point where [00:17:00] we are looking at more than half of PC volumes next year to include an NPU now what people are doing with that NPU and whether there's a real use case around that's still the part that's shaky and I think the industry still is gonna need a number of years to get that sorted out. But maybe to tie this to your point about Compex, I think one interesting thing about Compex this year compared to last year was. It did feel a little more low key than last year. Granted, last year was a bit of an exception. There was just so much hype around a IPCs. Last year you had Intel in town, a MD in town, common Town. They're all talking about A IPC. We got this processor, we got that processor, all this kind of stuff. This year there was no Intel keynote. Granted, they, obviously they're having their own management changes and challenges around that, so it's understandable, but there was no Intel keynote. You look at other vendors like asus, they didn't do their big glitzy product launches either. They still launched products, but they did 'em directly with media rather than doing these glitzy product launches. And even with a MD Lisa Sue wasn't there. Granted, their consumer team was there. They [00:18:00] still did a launch, but they weren't really talking about a I PCs as much. It was more about. GPUs and workstations and that sort of stuff. This year it almost seemed as if there was a bit of a pause with A IPC, or at least from a high visibility keynote perspective. It's not to say that. The A IPC momentum wasn't there or the semiconductor vendors weren't there because they very much were right, despite the absence of a keynote and all their management changes. Their CEO was in town engaged with the Taiwan ecosystem, which is very much, supplying the PC industry. So they were definitely there. They were showing off their next generation product called Panther Lake, which has a high end NPU by the way. A MD was certainly still there. Qualcomm was there. They had, PC OEMs like Lenovo, hp, ASER, as on stage. So the momentum was still there, but it was much lower key compared to last year. And of course, the other thing with Computex, by the way, don't forget as much as it is a PC show in the past couple years, it's become a Jensen Huang show from [00:19:00] Nvidia. Yeah. 'cause he's just such a rock star, especially in Taiwan. Where literally there's like crowds. There was one day on the show floor of Computex. He happened to be on the show floor and they had like all these ropes cordoned off. I was like, okay, is it like Lady Gaga that's here or something? He's like, no, it's Jensen Huang walking the floor, signing autographs and stuff, he, of course, is very much now a very big fixture at Computex. But his discussion or announcements were really more about things like, data center, ai and all the AI factories. And of course, this new this new building that they're building in the northern part of Taipei wasn't really so much about a I, PCs A I PCs, so it was more about Jensen just really talking about his data center and digital twins and smart factories and so forth. CRA: Now, if you go back 20 years ago, BMa: Steve CRA: Jobs changed the entire industry by wearing his black t-shirts where everybody's a creative with a black T-shirt. Yep. Now with NVIDIA's, CEO, with his leather jacket, do you think everyone's gonna switch? Is it, are you gonna be wearing leather next time we [00:20:00] speak? Yeah, BMa: unfortunately not. Yeah. I need to get a leather jacket, right? No, I don't have a leather jacket. But have you seen, by the way, I've seen a, a Halloween costume. This was floating out on social media. It was a Jensen Huang Halloween costume. Some little kid very cute, was dressed up as Jensen Huang, as black leather jacket, and I think he's sprayed his hair white. It was very cute. CRA: Okay, we talked about ai MPCs. Now let's go to AI on the smartphone. So this has really taken off over the last couple years. Yeah, Samsung kicked it off with Galaxy ai. They're on their third major release and it should have their fourth one, I'm guessing, coming up in. When's unpacked? It should be about July, August or something like that for the next version. Apple then came out and its AI on the iPhone wasn't as impressive. What do you see going on in this space with AI on the smartphones right now? BMa: Yeah, apple's a big question mark, right? Because they've been struggling with Siri. They've been kind of promising this. Next version of Siri that's gonna be so much improved and be able to do all these things for you in an agentic manner. But you know, they've publicly stated, oh yeah, we're behind on this. And whether or not they actually say anything at their developer conference in the next few weeks. [00:21:00] Rumbling is that they might not have anything yet. So I think that's probably where shareholders are concerned. So Apple is a little further back and it'll be interesting to see if and who they partner with somebody to get them back on their feet. As you pointed out. Samsung on the other hand, has been very early to the game. Trying to really talk about Galaxy AI and getting a good amount of credit for it in the process now. Some of the things they've talked about that have resonated with buyers include things like circle the search, which is powered by Google, by the way. And is increasingly going to be seen across other Android vendors now that Google is basically building that as well as Gemini into Android. So we'll see more of that across other things, but. I think the other thing too is, if you look at the various use cases, regardless if it's coming from Samsung, Google, apple, whomever, it might be, there's, earlier I was mentioning how AI PCs were looking for a use case. You could argue on phones still looking for a use case. Now maybe it's not that bad on, on, on phones, you ha you do have things like circle to search. We've anecdotally seen folks, even in developing [00:22:00] markets, for instance, going into a store saying, Hey, you know what? I want that thing that erases things from the background, the photo bomber or that thing that doesn't belong in the photo. They might not necessarily think of it as ai, but they know what the practical benefit is. So there is some of that there. Does that alone necessarily motivate sales of phones? Sure. In some cases it does, but not necessarily enough to change the total market size. We're only looking at low single digit percentage growth. In the smartphone market this year is, again, single digit growth in the past year. This is a mature market. It's relatively flat. It's more so just the transition, a mix shift if you will, between non-AI phones versus phones that are increasingly AI enabled. CRA: So I wanna go back to circle to search real quick because when it first came out I thought, well, this is kind of a novelty, but I didn't really understand like the real value behind it. And I was with Ian Chong from Samsung and we were sitting there at an event and there was this guy that was working with a film crew. And he had these really funky [00:23:00] socks. And Ian is famous for his wearing funky socks all the time. Yeah. But the socks this guy had on were Chupa chips, like the lollipops. He had the chupe chip logo and he's like, well watch this. And I was filming him doing, he grabbed it, he circled the socks. UNC circle the search. Clicked it, it went out there, found them, and he basically ordered 'em right there. And I thought that was quite fascinating because then I realized it's like that's what you use it for. If you really wanna find something quick, I wanna know where I can get that. And it's just done immediately. It's something that you could always do by going through the normal steps, but it just doesn't offer you right there. BMa: Yeah. What you want to do is reduce that friction, right? Yeah. Make it as easy as possible to do something. And the trick is. Also to get it beyond just a novelty, right? A party trick, if you will, and get it into something that's really practical. And I think that's where it gets interesting because developers are gonna come up with interesting stuff. We just don't know what that is. Right? Everybody asks, what is that killer AI use case for a consumer? There's still no obvious answer, it might CRA: be us that actually figure it out because if you remember back with, telecoms, SMS was not supposed to be a big thing. It was just something you launched as a feature, but they never knew it would actually take off and then turn into the whole [00:24:00] messaging world. But that became the big thing and it was us, the consumers that decided it. So maybe it's one of these things, it's out there, but it might not actually be some of the main vendors to come up with. It might be us on the demand side going, actually this is what I wanna do with it. Yeah. BMa: Yeah. Users will come up with it. User definitely shouldn't underplay the role of consumers or users in this process. By the way, one of thing we should bring up is. A very big announcement last week from OpenAI, which was that they were acquiring Johnny Ives startup called I, which yeah, exactly. Which the idea here is design to design a piece of hardware undisclosed. They still didn't give a whole lot of details around it but. And most likely it'll be some kind of a puck without a screen or something like that. They said it wouldn't be a wearable, but we'll see what it is. But my point is, earlier I was talking about how we need to reduce the friction as much as possible in order to use AI services. That's basically what Sam Altman was saying in the launch video. Right. He was basically saying, how do you access OpenAI today? You pull out your laptop, you open it up, you open the web browser, you go to the OpenAI. In [00:25:00] pro website and you type in your prompt. There's too many steps in that process. So how do we make it easier to remove all of that friction to access these AI services and whether or not that manifests itself in glasses, ring, watch, pendant pin, I don't know, whatever it's going to be, and. Hopefully with the magic of Johnny, ive there's something cool here that comes out of it. But the point is that as we look at all of these AI players whether it's open AI or Microsoft or Google and all these guys, if you look at what's really happening here, it's about finding. Means of distribution of these AI services. That's why you've got Microsoft pushing copilot through windows, through office, through every property that they have, Bing edge, all that kind of stuff. It's why you've got Google pushing Gemini through Chrome, through Android, through workspace, through everything that they have. That's why, it'll be increasingly interesting to see how not only folks like Open AI play through this. And of course open ai. Don't forget they're actually powering [00:26:00] part of Siri, right? But also, whatever they may be doing with Johnny i's company. And then you think about other companies like Perplexity, which have actually been quite proactive in working with the vice vendors. Now, granted with smaller ones like Motorola and nothing, nothing's a small Chinese phone vendor, by the way, in case you were wondering what that company is. But these are. What you're seeing here is these guys are looking for means of distribution and perplexity, by the way, was very eager. When the when the US government was chasing after Google for antitrust issues and suggesting the idea that they'd have to sell off Chrome? Guess who would want Chrome? Right? Because it's such, so omnipresent that it'd be a great way to distribute AI services. This really gets quite interesting between how hardware and devices and the type of hardware that you use. Collides with these services that need to meet consumers where they are to meet the users where they are and make it as easy as possible to use these services. This is what will get quite fascinating in the next [00:27:00] 5, 10, 15 years. CRA: I tell you that, just if you think that this industry has only been around for a little over two years now, maybe two and a half years, how fast it's taken over everything. And I saw a stats, actually, I used the stat in an event in Singapore recently. That showed that AI take up within enterprises surveyed by McKinsey has now risen to 78%, but it's taken them since 2017 to get to this point. And in two years, genAI is almost right behind. It's about 71%. So you're seeing this massive quick uptake on it. And I just think it's fascinating how it's not only them that are talking about it, but I mean, it's taken over my personal life, the way I do my work, the way I do everything right now. I mean, I never use Google to search anymore. So it's just sort of like I'm, I think it's gonna be a very interesting few years. I think we expect it to really transform our lives. I think it's gonna do way more than we actually expect. BMa: Well, just to sanity. Check that a bit. I would point out that, there's a difference between the early adopters before it goes mainstream. And while I don't disagree with you that. The acceleration and ramp up has been quite significant. There's also a difference in the [00:28:00] enterprise example between folks doing proof of concept and the organisations that are doing full deployment on the consumer side. There's a difference between, techies like you and I adopting this quickly versus the mainstream. Now of course, as you look at, the grandparents of the world, if you will, that through just using Google search and are starting to realize, oh, there's this AI overview feature within Google search now. And oh, Gemini is now being built in. Yes, that'll help accelerate and facilitate this. But yeah, there's always that leap to get past those early adopters . CRA: And I also wanna clarify this. I don't think enterprises are gonna make this an incredible success. I mean, if you look at it, I mean, even like most recent survey I saw. I think it was from Bain, 88% of digital transformations failed, and this is in 2024 now. This number hasn't changed much over the last seven to 10 years. So just because we have great technology doesn't mean as corporates, we're still not gonna completely screw it up when it comes into deployment. I. Which is great for me because I gotta do these keynotes and I always want examples of tech, screwing up or [00:29:00] chatbots behaving badly. BMa: You'll have lots of material. CRA: Okay, so we've now covered off AI with the smartphones, but what's that next real transition phase for them? is it gonna be something in the design of it. Are we gonna see a lot more on the foldable side? Samsung their foldable devices are beautiful. Are we gonna finally see one from Apple? I. BMa: Yeah, great question. So I'd separate this into two parts. First, from a short and medium term perspective, and then a longer term one. For the short and medium term, you're right, we're gonna see more experimentation in these sorts of devices. We've already seen these bi-fold and even tri-fold types of products. Huawei's got that one that expands out to a gigantic screen. I think that's gonna stay niche for now. It's still a $3,000 product, reliability and applications. There's still a lot of question marks around that, but we're gonna see some experimentation around that. I think Samsung certainly having seen what Huawei is doing is. Probably a lot of pressure internally there to say, Hey, well we gotta have something to, that'll stack up to that. Right? Even if Huawei is China only mostly China only, I'm sure there's the need from a [00:30:00] Samsung perspective to try to show that they can still innovate. They've hinted at new innovative form factors coming. So allegedly they'll have something coming out around that. As you pointed out, apple there's rumbling around, there's, everybody's been asking when is Apple gonna have a foldable phone, right? And. There's a lot of question marks around, whether there's reliability and supply chain and applications and all that kind of stuff. But don't forget, 20 year anniversary of the iPhone is approaching soon, right? So is this 20 year anniversary product going to be a foldable? Is it going to be a super thin one to fight the Galaxy S25 Edge? There could be something in the pipeline. We'll see again with Apple, any rumor flies and who knows how credible some of these are. But there's some rumbling around some of that. So that's what I would say in the short term medium, the longer term, I think the question is of course, and this is probably what Apple shareholders have been most concerned about, after the smartphone era. What product does everybody use? Right? What? Basically what product [00:31:00] Surpass supersedes a smartphone. And there's, if you look at what Zuckerberg's trying to do with glasses, I think everybody's trying to aim for in that kind of direction. We can go hands free basically, and be Tony Stark in the Avengers Iron Man, right? But basically this idea of moving towards things like glasses, and that's what Apple recently, by the way, has been rumored to be working on, is a set of glasses. We've already seen. Meta doing quite well with their Ray Band Metas. These are just normal sunglasses with, but with a camera and some speakers. There's no screen yet, but eventually that's the direction that Zuckerberg's been moving towards, and he's already been showing some of the prototypes that they've been working on that do have a screen. . So that's the direction that we're moving in the longer term, but I still think we're very, very far away from that many years, at least five years, if not longer. Because if you think about it, things like. Battery are a huge thing. Things like brightness. If we really are having a screen brightness, when you're in broad daylight and what [00:32:00] kind of resolution are you getting on these things, it's not gonna be like you're watching a 4K Netflix video on one of these little screens. It's probably gonna be more simplistic so I don't think we're there yet. And I think it's still quite a bit further away, but, and so in that sense, the smartphone's still going to be here, but maybe it'll tie this to the earlier discussion we just had about open ai and Johnny I. Well, what is that new product they're working on? Is it some kind of a puck, whatever kind of product it's gonna be. That's gonna be some interesting stuff that happens in the longer term. Short term. Yeah. Let's see if it's a tri-fold, foldable, or even a bi-fold phone from apple . CRA: I, I do have questions. I mean, you're talking about it from the technical feasibility. Yeah, but I'm looking at it from us as consumers. Are we ready for this? Remember what Google Glass, Google Glass was an amazing piece of kit, and that's 10, 12 years ago. But we weren't ready for it socially because we think it's creepy that someone's walking around filming me. But the other thing, more importantly that I wanna come back to this is twice the events in Johnny Ivy. Johnny Ivy with the puck. Now what if they actually did it as two pucks? And we could [00:33:00] basically be like, print this layout. So maybe that becomes the whole new design theme. We're going around there with two pucks on our head, and then some funky glasses. And just, looking like complete and utter idiots. This could be our future. BMa: Yeah. You and you know what, you're touching on a very good point, which is the problem that the wearables industry has had for some time is. Tech and fashion don't always mix very well, right? And, glasses, and fortunately Facebook kind of did it right with, by partnering with RayBan that actually did work out. But in a lot of these cases, is society even ready for that? Yeah. For, like you said, having things like cameras everywhere, that'll take some time. It took a while even for, you remember when Bluetooth headsets first came out, right? It was kinda like, why is that dude talking to nobody over there? And it took a while for society to accept that, oh yeah he's talking on the phone now. We all know now that they're talking on the phone. But it was weird back then when you first saw somebody with that first Bluetooth headset. It's like, that dude's talking to nobody. CRA: Alright, so let's look at some future trends here. And I'm gonna look at it from the negative side. And if you go back through the smartphone industry over time so I'm old enough to have had the [00:34:00] Palm Pilot which went away. Then there was a handspring, trios, those went away. And you had your Nokia devices, Sony Ericsson Blackberry, which we both worked on together when we were at IDC all went away. What do you think is going to happen? Are you gonna see that Apple and Samsung can maintain their lead in the Western world and then China's just gonna be able to continue like a lot of these vendors, like Xiaomi Huawei still do well in the rest of the world, or do you think some of these might be set to rise up or fall away? BMa: Yeah that's always the tricky part, right? And that's again, probably where Apple shareholders have been a bit concerned about whether Apple, especially if they're behind in Siri, right? Whether they can maintain that lead, especially as AI gets more integrated into these devices. So, obviously it can go a number of different ways. I'm not trying to dodge the question, but I think the concern of course is. It is. Back to that earlier point, what is the thing that as we move past the smartphone era, what does that technology look like? And maybe to your point. Who is the supplier of that in the process? Who is the primary player? Is it OpenAI and this [00:35:00] hardware startup that they acquired? Is it a Chinese vendor like you pointed out? I think there's, that's basically where a lot of the big question marks lie I would think that you'd still have, with the existing incumbents today and the R&D that they have, there's still going to be a lot that will put them in a good position. But yes, incumbents inherently get disrupted as well too. Yeah, they gotta be on their toes as well too, because there's whether that small startup that comes along and just pulls a rug out from under them that's of course a concern. CRA: Now also, let's take one last look back at Computex. So you mentioned that it was a little bit more low key this year than it has been in previous years. I hardly saw anything. So what I'm wondering is there anything else that I missed that I should be aware of from Compex this year? BMa: Compex, like I said is primarily, or at least it's been known as a PC show, but a lot of the talk was about data centers which I don't cover, but. That's what Jensen Wong was talking about with envy link and doing this connective tissue behind all the [00:36:00] suppliers around these accelerators that can be built in the data center and these gigantic racks. Foxconn was talking about things like smart factories and so forth. So there's a lot of an industrial slant there, which admittedly I'm not very well versed on to be able to talk about. But I think the other thing I would point out is. Even though I said it was low key, I would say that was low key from a PC perspective. And to be fair to the organizers of Computex, this past week coincided with so many other industry events, right? There was Microsoft build, there was Google io, there was Dell Tech world. There were so many events all concurring at the same time. There were some announcements at some of these other shows too at Microsoft Build. They were talking about. Windows and Windows, ml and Windows having embracing anthropics MCP, which is a protocol that lets AI models talk to each other. At Google io they talked about how Gemini is being integrated into more and more layers of the stack. So there's a lot of additional stuff that was also happening over the past week. And Dell, by [00:37:00] the way. Dell Tech world here is an interesting one. At Dell Tech World, they unveiled a workstation. It was a mobile workstation, so it looks like a laptop, but it's got a couple of Qualcomm data center, AI chips in the device. It's basically for AI researchers to run their AI models without having to use a data center, which was quite interesting. And Qualcomm didn't talk about this at Computex 'cause they were waiting for it to. We announced that at Dell Tech World in the US and then the next day in Taiwan. Oh yeah. I saw the product. They had it on display after it was finally unveiled. So anyway, my point is it's not just about PCs, of course. And in fact, to my earlier point on Nvidia, yes, they were also talking about DX Spark, which is like a, it looks like a pc. It's like a server that's been compacted down into the size of a pc, sits on the desktop for an AI researcher to run Linux on and train, and I think run inference on this model on, on, on this box. DGX spark $3,000 box. So anyway, it looks like a little MacMini kind [00:38:00] of little square form. CRA: It's amazing where innovation's gonna come from. We were just talking about the fanciest devices and how many megapixels. Now it's anything's AI related. Now you can get a data center chip inside of a little box. Brian, thank you so much for joining us again on the podcast and sharing your related thoughts. I hope to have you back on again and I hope to see you for more meals take care. Yeah, thanks. BMa: Thanks.