On this episode of The Six Five Webcast, hosts Patrick Moorhead and Daniel Newman discuss the tech news stories that made headlines this week. The handpicked topics for this week are:
- Top Tech Trends 2024
- Apple Watch Import Ban
- Salesforce World Tour 2023
- NVIDIA Responds to AMD Performance Numbers
- Adobe Pulls Figma Plug
- What to Expect at CES 2024
For a deeper dive into each topic, please click on the links above. Be sure to subscribe to The Six Five Webcast so you never miss an episode.
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Disclaimer: The Six Five Webcast is for information and entertainment purposes only. Over the course of this webcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we ask that you do not treat us as such.
Transcript:
Daniel Newman: Hey, everybody, welcome back to another episode of The Six Five Podcast, Episode 197. We are heading into the end of the year, but this isn’t the end for Patrick and myself, or is it? We don’t really know for sure. This is the time of year that the two of us like to settle into our beach chairs, grab a ice-cold margarita, salt on the rim, we turn off everything. We pay no attention to the tech industry, we don’t write, we don’t blog, we don’t tweet. We don’t think about next year’s revenue, we only focus on looking at our family, staring at our children lovingly, telling them-
Patrick Moorhead: Dude, wake up. I’m going to shake you. Wake up.
Daniel Newman: Sorry. Welcome back to the show, where am I?
Patrick Moorhead: In some alternate universe.
Daniel Newman: Everybody kind of knows that that is complete and utter BS, but we are here for another week. We are super excited. Pat, there’s always tech to talk about. Mixed show this week because it has calmed down a little bit. There is a little bit less news as we are heading into the end of year. Do you think anyone bought that crap, by the way, that I was starting down that path?
Patrick Moorhead: I was afraid they were trying to get that, and then somebody’s going to try to cash checks based off that.
Daniel Newman: If I kept going, someone might believe me.
Patrick Moorhead: That’d be scary.
Daniel Newman: We’ve got a lot going on still, and we’re going to round off our show here with some thoughts on where things are going. Thoughts on our first events of the year. Patrick Moorhead, best looking guy in technology not named Daniel Newman. How you doing today?
Patrick Moorhead: I’m doing great, man. Just love to be in the chair. Yeah, I mean I like to spend this time in the interim thanking my customers, having corporate meetings with myself to hammer out the next year. I’m just so thankful for my customers and the ability to do that. I do have a big tech company PTSD, 13 years after leaving my last big company, and I probably should appreciate it more and be calmer, but I just can’t help myself, Dan. Literally, if I’m not moving forward, I’m moving behind. I’m moving backwards.
Daniel Newman: Absolutely, I agree.
Patrick Moorhead: I heard a Greek philosopher said that, right?
Daniel Newman: Well, what was it that you said? It really doesn’t matter what we accomplish, we’re never going to be satisfied, it doesn’t seem to matter. The clients are never going to be doing enough fast enough. We’re always going to be pushing for that next wave of innovation, but you know what? It is that that makes us, us and us is what we are. So there’s some philosophy for you. That was a great Greek philosophy for you. So anyways, we’ve got a great show today. Hopefully it isn’t our last of the year, but if it is, thank you to everybody that spent the year with us tuning in.
We’re going to talk a little bit about some of the trends we see for 2024. Then we get some news and some updates from Apple, Salesforce, NVIDIA and AMD going toe to toe and Pat tweeting his heart out with some good, engaging, thoughtful content. Then we’re going to talk about the CMA. While the European Union and the UK may not innovate really in any meaningful way, they sure like to stop others and we’ll talk a little bit more about what they’re doing there and then we’re going to do a little bit of a preview for CES. But Pat, let’s take the first few minutes and just give what is your 2024? This year was gen AI. And if you guessed that, you’re right, what’s 2024? What’s the tech trends of ’24 that you’re going to be looking for?
Patrick Moorhead: Yeah, it’s going to come no surprise that AI for 2024 is going to be front and center, but before I dive into that, I want to make sure that people see the gamut of it. I think that we’re going to see a quantum evolution next year with real value to the enterprise, or to scientists. I think the hybrid multi-cloud progression is going to get, we’re going to see more fabrics and those fabrics going from 1.0 to 2.0 for enterprises to lean into it. And what I mean is regardless of where you’re running your workload, whether it’s in your on-prem data center, whether it’s on your data center edge, let’s say you’re a retailer or a manufacturer, a sovereign cloud, public cloud, being able to manage core services like applications, like networking, various forms of security, you’re going to see those start making a much bigger impact.
And then we’re going to see, dare I say the metaverse, right? We are going to see, I think it’s still going to be in experimentation time, right? You have an Apple headset that’s a thousand bucks, $3,000 and more of an ISV and developer vehicle and looky-loo. But I do think that is going to be the next generation of experiences. And whether it’s five years out, 10 years out, I can’t tell you exactly once we get to a 100 to $300 headset that does everything that Apple’s does, Meta will be a player. But I’ll give you most of your time on AI, but most of value capture today is on the picks and shovels, the chips, the infrastructure that processes and moves that data. And there are certain companies who got credit, the NVIDIAs, AMD, Broadcom, Marvell, Microsoft with OpenAI, and even enterprise players like IBM and Salesforce.
But the next wave is going to be all that, but bigger, and have more people participate, right? We’re going to see AI PCs, AI PC chips. So we’re going to see Intel, Dell, HP, Lenovo and Microsoft with Windows. We’re going to see infrastructure at the edge so folks like HPE. We’re going to see AI smartphones and AI chips, the Qualcomms, the Skyworks, and then finally the SASs of the world who haven’t necessarily participated in this financially, the Adobes and even the Boxes. So yeah, that’s it. We have AI, more AI, quantum evolutions, the hybrid multi-cloud progression with more fabrics, and an evolution of the metaverse. While it won’t be mainstream, we’re going to learn a lot.
Daniel Newman: So much there, Pat. Thanks so much for giving us the little bit of predictions to the future. Look, I’m not going to take any risks and even begin to proclaim that there is another topic besides AI because there’s not. Nothing else will be top of mind or front and center. Now again, all of the infrastructure and parts that make AI happen are going to continue to need to be invested in. Where AI happens will continue to be a conversation, cloud, edge, somewhere in between. But here’s my three big predictions for next year.
Responsibility and trustworthiness of AI. I shared a picture this week, this morning on Twitter to a lot of acclaim of a person that negotiated with a chatbot to buy a Chevy Tahoe for a dollar. Look, it’s probably not a binding contract. The fact of the matter is that people are going to continue to look for ways to take advantage of enterprises, companies, businesses that are going to be using chatbots to create binding relationships. Not to mention that the grounding and trustworthiness of the responses, we’re going to need to continue to work on that. Companies are going to need to figure out how to do this correctly. I like indemnification, I like the companies like Microsoft and IBM and Google have all talked about this, but how about better than indemnifying actually making this stuff work correctly? That would be better. And so this will be a big focus of the next year is going to be building grounded vector databases that stack with knowledge graphs that are accurate and can be trusted for accurate outputs. One.
Two, monetization. You alluded to this, Pat, but this was a year that was all about hand waving and chest puffing. Only a couple of companies actually meaningfully benefited from this AI wave. Everyone else actually saw revenue declines, even if the part of their business benefited from AI. Think about all the infrastructure companies and server companies that saw massive declines in CPU servers, sold GPUs but still didn’t even offset it to the point where they were growing. These companies are going to need to really figure out their AI stories and they’re going to need to get above water on AI. And by the way, I do think some of it’s going to be through rotation back to traditional compute CPUs and accelerators that will actually be used to inference AI because it won’t all be done on really high-priced GPUs. And that brings me to my third big projection and can’t wait to be over in Davos to spend all my time talking about this, Pat.
By the way, there’s some hand waving. Hand waving. Sustainability, and not sustainability from the lens of the 2020 and 2021 version of that. I kind of find that to all be nonsense at this point, but it’s going to be, the fact is of 1 to 2% of the world’s power is being consumed by data centers right now. We do need to figure out a way if we’re going to continue to exponentially grow the utilization of AI, large language models, training models and GPUs, it’s going to be important that we find that balance with lower power, more sustainable, higher performance variance.
So this is going to come down to our friends in the silicon industry, Pat, you and I’ll talk a lot about this, and then optimizing these workloads to deliver more sustainable outputs. The world is watching. This is one of those true cases where the utilization of power while building high performance needs to match, and we need to be using the best and most optimized silicon and applications to deliver more efficiency because this is only going to grow. The demand and use is only going to grow, so those are my three. There’s a lot of other things we could predict on, Pat.
Oh, I got one more. I think the Cybertruck is hideous. I think it’s a failure, I do. And by the way, I like Elon Musk, so this is not a Dan doesn’t like Tesla or Elon thing. This is like I’m driving around Austin and I saw pictures of this thing online. I’m like, “That thing is bad to the bone.” Then I went to the gym last night and I saw one sitting there. And by the way, the siding on this thing, the material that it’s made out of, looks like you know those refrigerators, they get all the smudges on them? You get the stainless steel with the smudging and you can’t get the smudging off? There’s going to be a lot of guys that are going to have their wives yelling at them because they got smudges all over the side of their Cybertruck and I don’t think they come off. But anyways, so.
Patrick Moorhead: I don’t know, man. I saw one on the road, and I want one just because it’s so unique and different.
Daniel Newman: God, I’m probably going to have to pop your tires or something.
Patrick Moorhead: I don’t think you can.
Daniel Newman: It’s not going to be unique though.
Patrick Moorhead: Can’t you shoot the tires?
Daniel Newman: Not going to be unique when there’s 2 million of these things running around looking all dystopian and all over Austin. I mean I can’t wait until it becomes the Uber of choice. You’re going to have the Uber Cybertruck. It’s going to be its own Uber category. It’s going to be like-
Patrick Moorhead: Like $120,000, right?
Daniel Newman: What’s that?
Patrick Moorhead: It’s 120 grand.
Daniel Newman: What’s that matter? I mean, and when I went to Amsterdam, the Tesla S has been the taxi for the last 10 years. So you know what? Maybe we’re right.
Patrick Moorhead: 40 grand, 120 grand, no difference.
Daniel Newman: Truck’s not here, man. We’re here to make proclamations. I want Tesla to do well, I want Elon to do well. I don’t have any issue there. I just think the truck’s ugly.
Patrick Moorhead: Yeah, I think it is ugly. I agree.
Daniel Newman: Anyway, but let’s move on. Pat, speaking of ugly, Apple got some ugly news this week. I know you’re an Apple Watch wearer. Do you have it on right now?
Patrick Moorhead: I do. Tracking as we speak along with my Oura ring.
Daniel Newman: Pat is constantly monitoring himself, keeping himself in a spiral of doom. He is certain of his own mortality, and he wants to make sure that he’s got data to prove it every single minute of the day.
Patrick Moorhead: Dude, are you kidding me? I need to know when to inject the unicorn blood into my system every few hours.
Daniel Newman: I know. I prefer to be surprised. You prefer to be in the know, but either way, what happened?
Patrick Moorhead: Yeah, so a couple of things going on here. So you have Apple that has good innovation, but they’re bullies to their suppliers, and they on occasion steal other people’s intellectual property. It’s been proven in court many, many times. This is not just opinion, it’s just a fact. And what they did is they stole intellectual property and hired the CTO and some more people from a couple called Masimo when they were in negotiations for a licensing deal, an acquisition or even them buying sensors. And then suddenly, Apple shows up with an Apple Watch with oxygen sensor capabilities on it after hiring Masimo’s people. Masimo takes them to court, it’s a multi-year battle, and they end up not only winning at the ITC, but also, they won on appeals at the ITC. And ITC issued a ban on importation from Apple Watches that are made in China, and also I think a few of them are made in India into the US.
By the way, the official word has not come out yet, I just want to be very clear on that. But by Apple’s actions, which they’re going to stop selling it on the 21st online and then removing inventory on the 25th I think is a pretty good indication on where this is headed. Now, ITC ruling, its apples have not always stuck, right? We saw Obama overturned one. There was a judgment that the ITC said that Apple was ripping off Qualcomm’s patents. I think at the ITC, it was one out of six. Qualcomm asked for an injunction and our wonderful administration said, no, us moving forward and selling iPhones is more important than your intellectual property and the ban never happened. By the way, it did result in Apple and Qualcomm coming together.
So I think this is a really big deal, and what I’ve been telling a lot of the reporters that I’ve been doing interviews with is I can’t tell you when or how, but I can tell you who has the power in here and where the motivations might be. And that this is much more important to Apple to get this resolved quickly than it is to Masimo who has been spending probably $20 million on lawsuits trying to win against Apple. And I don’t think that Masimo is going to be quick to negotiate some licensing deal either versus Apple where I think you’re driving 17 billion in Apple Watch sales annually, and most of them are sold in the United States. Apple needs to fix this. They don’t have the power here. They have so much more to lose than they have to gain. I’ve seen some people say, “Oh, it’s just the SE, right?”
But here’s the deal. Apple got all these people interested in sensing oxygen and primarily around the, are you sick? Do you have sleeping problems? Type of thing. They made the bed and now they’re sleeping in it. Two potentials here. There’s also a thought that Apple can issue a software fix, but guess what? The lawsuit and the judgment against Apple wasn’t just about software, it was also about the hardware. They could disconnect the oxygen sensor, which is a potential, but in my estimation, they likely need to send these watches and have them reworked, have the oxygen sensor removed, and potentially come up with a new model of watch that’s the same Ultra 2 and the other ones with SPOX and have those sensors removed as well.
So listen, this could get fixed this week, it could get fixed sometime in 2024, it might never get fixed which would be weird. All the applications like my sleep watch stuff that uses SPOX and my gosh, I mean all the applications that use it even on my phone, and I’m not the most in shape person, but Athlytic, SleepWatch, Withings, iBreathe. I think even the Calm app uses it. I could be wrong, but yeah, Apple needs to fix this and need to fix it quick.
Daniel Newman: Yeah, you got a lot of good detail there so I’m not going to spend a ton of time on this path. The things I’ll double click on are one, there is a genuine and general misconception about Apple as always being the innovator. Apple is the implementer, and this is a good example of how Apple is great at putting together other company’s innovations and creating products that are more usable, more desirable, and better marketed, and this has been the company’s history for a long, long time. You go through the history of whether it’s MP3 players turning into iPods, whether it’s Apple iPhones becoming something built out of the amalgamation of Blackberries and various different early iterations of smartphones and other phones that attempted to put computers on smaller surfaces.
Patrick Moorhead: Hey, how about this one? Imagination Technologies was GPU, they hired a bunch of the engineers, and then they made Imagination a deal they couldn’t refuse on licensing. So this is Imagination all over again.
Daniel Newman: And their history and pedigree is, in these situations, if they don’t get what they need or want, they certainly have been known to be a bit of a bully. I’m pretty sure Imagination never quite recovered despite getting quite a bit of attention for what had happened. By the time they got any attention support and anyone really took notice, Apple had already done the deed and it was-
Patrick Moorhead: Hey, remember the company Apple spun up as a supplier to put special coating on the top of Apple Watches? Their stock went to 1,000 X. And then Apple’s like, “Eh, no, I don’t think so. I’m going to do it myself.” And then destroyed the guy. I mean, there’s so many examples. They tried to build the same BS to Qualcomm, right? Steal their IP, not pay them for two years. Anyways, I’m sorry, you were talking.
Daniel Newman: No, it’s just fortunate that it seems that there is a economy of scale by which they can’t get away with it, but these smaller companies that are in the hundreds of millions even, which by the way is a large company by most consensus, but Apple can literally suffocate them, and that’s what has happened in the past. Having said that, there’s a lot of people out there that love this technology, want these devices, and this is the most popular watch on the planet. Just so you’re clear, Apple is the world’s number one watchmaker by revenue and by volume, well above Rolex in case anybody wondered. They need this continued innovation and technology to be able to continue to grow their market, so I do feel they will get it rectified, and it probably won’t be as big of a concession as they probably should have to make. All right, let’s keep going. Let’s talk Salesforce. Pat, Salesforce is on World Tour in case anybody wanted to know.
Patrick Moorhead: What does that mean for people? What does it mean? What does Salesforce world tour mean? That they’re going from, I know, sorry, they’re going from city to city, right? A similar way that Mongo does. No, not everybody follows Salesforce, just thought I’d add that.
Daniel Newman: No, I mean they go and they do events in different regions and cities and they announce different things. I mean, look, this has been a, Salesforce by the way, go back to my predictions. One of the companies that has done a pretty good job of talking about a monetization strategy, you’re talking about going back more than half a decade since it initially announced Einstein, which was going to be an AI in the boardroom. Early implementations did not perform to the standard. But with the advent of generative AI, I think it’s pretty safe to say that with customers that have big investments in Salesforce, they’re going to be able to get more out of their Salesforce instances with the utilization of LLMs, Copilot, Genie, Einstein, and its broader portfolio. But what did they announce this week? I mean, basically it was all about Vector and Copilot.
And so what does that mean? Well, first, people that use Salesforce tend to be, at least historically, the idea was always about simplifying the software stack, the software environment, right? The reason you went to a full SaaS-based CRM was because you wanted easy up, easy setup, easy features, and just be able to have the benefit of continuous updates that you get from Salesforce. One of them is going to be about fine-tuning LLMs. And so the company’s offering what it’s calling its Data Cloud Vector Database. This will enable different data types across the enterprise landscape to be utilized in biz apps and workflows. And it will help companies to ideally drive more ROI from their unstructured data. So the Vector is what really enables the unstructured data to be used. So things like emails and PDF documents, video call transcripts, getting them into the data set to be able to provide better responses, say through your sales emails or your marketing outflow. So that’s the first thing.
The second is going to be what they call Einstein Copilot Search. And this is going to be available in a couple of months. It’s going to basically offer enhanced search capabilities that can do better responses to complex queries across the different data sources. It’s going to tie into this Vector Database for sure. It’s going to be able to reply using Copilot to sales inquiries, customer service marketing inquiries, even across e-commerce and IT services. So this will be able to take a combination of an enterprise’s unstructured structured data landscapes. And one of the things that they’re really focused on with their Copilot Search is going to what they call their Trust Layers. You go back to my announcements for what I think is coming next year, and I mentioned trust and responsibility. Well, Salesforce has what it calls its Einstein Trust Layer, and this is where it’s going to be able to offer citations to source material.
So all of the outputs that you get from an inquiry to the Copilot Search are going to be able to provide you source material of where that response came from. Sometimes we call it grounding, sometimes we call it transparency. This is important, and obviously with Vector, it’s important that it’s going to be able to be associated with this grounding. Some companies are turning to a knowledge graph to be able to do this as well, but in the end, Vector is a good start, but everybody’s going to want to be sure that the technology is accurate, not just responsive. And so that’s going to be a big focus ahead, and Salesforce made some strides at their world tour in New York this week.
Patrick Moorhead: Good. Blow-by-blow, dude. I want to dial this out just a tad. So I was increasingly critical of Salesforce’s ability to tell the story with AI of how do I get the data that’s locked on-prem and take advantage of this to the company’s credit. They’re doing a better job with Data Cloud in doing that in services, either with API based or with MuleSoft and going to this what they call an ETL list data. But they’re not doing a good enough job, and I don’t know why they don’t lead with it.
I’d also like to see them be a little bit more publicly overt, that they can pull data in from SAP, they can pull data in from Oracle to be able to connect the front end of the backend that you love that, Dan? And without it, I think they’re just selling to the current customer base, and I think it limits their growth. Not that marketing tech and CRM and stuff like that don’t have growth, they do. But if you’re trying to put the whole stack together, whether it’s marketing, whether it’s Slack and all the other acquisitions that they’ve made, you have to be very deliberate in how you share that data.
And Dan, when I’m talking to CIOs or whoever’s in charge of AI and enterprise, first thing we talk about is the data. I think people are in on the projected benefits, but when it gets to the, how the heck do I do this? If it involves me exporting data that I’ve kept on-prem or on the edge for the past 30 years, it literally, it goes almost nowhere. So good job in progressing AI. Salesforce is one of these companies that I do feel like is taking advantage, and getting credit for some of the AI, but if we truly believe this is a 10, 20 X opportunity here with generative AI for companies who own it, they have a lot more work to do on this.
Daniel Newman: All right, so in the spirit of The Six Five, we have 15 minutes and three topics left. I don’t know if we can actually get this done, but Pat, this is a biggie, the next one. NVIDIA and AMD, toe to toe, blow to blow. You had some great tweets, run us down.
Patrick Moorhead: Yeah, a little background. I’ve been in and around AMD and NVIDIA since the early ’90s, and I used to work for AMD, shocking, and have a pretty good idea, 13 years ago, but have a pretty good idea of how to read the two companies. And AMD had its AI day that we looked at. And Dan, you and I were there, met with basically the entire C-suite and AMD showed some very provocative numbers. They’ve done this before, right? They’ve shown big hardware numbers versus NVIDIA on AI. And more times than not, it ended up to be a big nothing burger because, A, software wasn’t ready. B, quite frankly, NVIDIA had bigger, bolder, badder hardware when it came to ML and DL and engine of AI.
But NVIDIA responded, which was to come out and basically say, “Hey, they’re measuring the wrong thing here.” And there was a lot of conversation on the interwebs. I mean, I had 50,000 people just weigh in on the conversation and another 100,000 weigh in on AMD and NVIDIA. So it really took a life of its own. But net-net what the arguments, again, whether you buy into 8 bit versus 16 bit, tokens in tokens out, the response back and forth from both NVIDIA, AMD just reinforces what I said at the show which was AMD has something real here, and they’re going to sell a bunch. I know AMD said, “Hey, we’ll sell two.”
I don’t know how that can’t be north of 5 billion next year just on this one product. Maybe it’s limited by TSMC and COAs and packaging. NVIDIA should have had a second source on here, but they didn’t. And competition is good. Dan, I love a horse in the game here, not pulling for NVIDIA, not pulling for AMD, I’m not pulling for Intel. What I pull for is open innovation and a lot of competition. Competition lowers prices, improves innovation, and it democratizes AI. And I think that we need to have this technology in more hands than we do today.
Daniel Newman: Hey, look, you had a great assessment. I really enjoyed following your stream this weekend.
Patrick Moorhead: Yeah, it’s a weekend semiconductor shit post.
Daniel Newman: Love it. I love it.
Patrick Moorhead: I’m already coming up with my Christmas post.
Daniel Newman: Rants and raves. Short, the TLDR here is one, AMD has NVIDIA nervous, and that’s probably the first time in some time that they’ve really felt a threat. And so you could tell because, one, that push on the H200, and two, that push to rebuke. Pat, one thing I’ve learned is when you’re not afraid and not threatened by someone’s overtures, you don’t react to them at all, right? I mean, that’s at least what I’ve seen is you didn’t see much of a reaction to claims from other companies that have come out.
Having said that, I mean, look, you and I have been very balanced on this topic. NVIDIA’s got a great lead, has done a wonderful job, has built a strong portfolio, has won the early adoption, and has been basically anointed the superpower of AI. And so anytime you’re on top, and you can ask the Intel of 10 years ago this question, there’s always going to be people out there that are rooting for either a fall, a demise, or at the very least for some more competition.
Pat, in a topic as important as AI, we need a diverse set of players offering competitive products that are bringing pricing, that are democratizing software, that are developing tools that can make this technology power and realize its potential economically, educationally, systemically. So I love that they’re battling. It’s good because after a year, NVIDIA didn’t have much of a battle to fight. So let’s bring it on AMD, and Intel joined the fray and all the cloud players and Rock and ANOVA and Graphcore, keep it coming. It’s good for the world.
So, all right, next one, Pat. Let’s talk about Adobe. Look, I pretty much gave my entire dissertation on this in the beginning of the show. I’m pretty sure the CMA and the EU Competition Committee only exists for one purpose. And that’s, well two, tax and kill innovation. As I’ve always said, if you want to, the fastest way to kill any deal is get a lawyer involved. Well, the fastest way to slow down innovation, especially US innovation, is to ask the EU or the CMA for their approval of a deal. Why am I being so sardonic about this?
Well, the truth is, what we’re getting right now from Europe is the AI Act. We’re getting continued privacy. We’re seeing endless fines, fees, taxes, and levies against technology companies. Let me be clear, I’m not saying the tech companies don’t do anything wrong, I think they definitely will push the limits of how they can use data. I just am suspect of how much the European Commission and the CMA are doing to enable their own tech companies to be innovators. And if they’re only taxing our companies, the US-based companies and other companies, they’re going to make it very hard for companies on their own soil to be competitive. I mean, let’s look across the space of social media. Let’s look across the space of silicon. Let’s look across the space of ISVs, there’s a very small number of leading innovators coming out of Europe right now. And so this is why I always get a little bit feisty when it comes to this topic, Pat.
The Figma acquisition itself, there was no reason that I think it really needed to be killed. Of all the deals out there, of all the competition and antitrust issues, I just don’t think this was the biggest one. You’re talking about a collaborative work environment. There are many of these, they have a lot that overlap in some ways. There are some that are more direct competition, some that are pseudo competition. Adobe had its own product that it was willing to basically eliminate. It might take all that ends up happening here is a company like Adobe just builds their own now, or they’re going to go their own route, they’ll build their own and they’ll take the market the way they see fit. That’s what a company like Adobe can do.
And the one other thing that I see, feel very strongly about here, Pat, is that we want a strong VC environment. And when a good deal like this, that shows lots and lots of value to the market, that a company can build something with a big recurring revenue and get a huge exit, this entices investments, this entices public markets, private markets, and it makes founders more likely to want to continue to build things. When founders feel like they can’t build and succeed and exit at great premiums, you discourage them from wanting to play the game. Now, does this one deal change that trajectory forever? I would say probably not. But Figma built a very impressive product, sold it to a very impressive company for a very impressive price, and for no real reason that I could see fit after 18 months, the CMA just came in almost like, “Hey, we just want everyone to know we’re still here. We’re going to kill this deal.” I don’t know, it seems like we’re going backwards.
Patrick Moorhead: I mean, the worst part about the CMA thing is that they didn’t show up for 18 months, and that is just unfair against commerce, against innovation that it takes you 18 months to show up and do something. And I do think it could be a little bit of the EC versus the CMA, which is CMA wants to flex and show the entire world. Adobe and Figma weren’t even in the same business. Yeah, I can do wireframes with PowerPoint, and I can edit photographs and videos with what’s already free inside of Microsoft Windows, but there’s nobody using Figma to edit photos, add creativity or make videos look amazing. I know Adobe does a lot more than that, okay. But that’s just complete crazy. And I’ve heard some people say, “Hey, I saw a developer once use Figma to do,” this, that and the other. And it’s like, that’s just as nonsensical. I can get Word to do anything that I want. Is it smart? Probably not.
And then there’s nobody using, or very few people using Adobe to do anything real time and with others because they shut that service down. It was called XD, they tried. So this was all about the theoretical what if, that we saw this with the Qualcomm suit. We’re starting to see it now. And it’s levied down by people who last time I checked, hadn’t actually been in the business. Hadn’t been a product manager, hadn’t been in technology, but they have big, big university degrees and they study a lot and they read about it a lot and that’s an issue.
I’ll admit I didn’t steal this from the All-In pod, but it did get you wondering, do you even set up in the EU or do you set up in the UK anything? If you’re a startup, do you need that if you know you’re going to get stopped from selling your hard work and investments. And then you had mentioned this already, I’ll just say it in Pat words, which is what’s your cost of capital look like and what’s your valuations look like if you’re a startup? Is your only option to hammer it out for 10 years and hope to be a big company someday and no longer can you be acquired by a larger company? Kind of makes you think.
Daniel Newman: Absolutely. Good analysis. Pat. Let’s wrap it up. We only got a couple minutes left, but we are going to come straight out the gate whether we come back or not with our last episode of the year, it’s only going to depend on our, I joked about all the vacation we take, it really won’t be much, but whether we’re able to get on one more time or not, we’ll see. But first place we’ll head a week into the new year, CES, Pat. Give a couple things you’re going to be eyeing at this year’s event.
Patrick Moorhead: Yeah, first of all, it’s going to be AI, AI, AI, AI. A lot of it’s going to be real, some of it will be just completely made up. And I use your word marketecture. It’s going to be marketing, but the real deal, the AI PC, you’re going to see a lot of people talking about that and the continuum of it. Where we’re going to be in January, we’re going to be in the middle of the year and where we’re going to be at the end of it, everybody wants to own it. All the PC chip makers, all the PC brands, we will see. And we’ll probably see some AI smartphone action. Although NWC is the big show for that, I think you’re going to see people talking about how they will create a supercycle either in the middle of the year or toward the end of the year with these new capabilities.
We saw Google come in with their new micro models which is cool, and we’ve seen Qualcomm galore and what they’re doing with, God, I think it’s 10 different models that you can run on a Snapdragon-based smartphone. We’re going to see AI smart home stuff for those people who still care about the smart home. We’re going to see a lot of what CES has turned into, which has been partially an automotive show, right? We’re going to see safer cars. We’re going to see AI infused into two-wheelers like bikes and motorcycles. And just to close this out, since 1967 when the first CES came to New York City, bigger, better, cheaper TVs and more immersive audio.
Daniel Newman: Yeah. Did you mention AI? I think we’re going to hear some things about AI. I’m going to be really interested in looking for some innovation across digital health. We talked about the wearable and the watch, Pat. I’ve seen so much exciting and encouraging innovation of the tech and insights that we can have on our own health and wellbeing. People can be optimized humanoids, and I think the AI combined with sensors and wearables, readouts, and then complimenting that to LLMs and medical models could really start to help us get better insights in really simple human language that can help us optimize our lives and optimize our health. Our health, Pat, you’ve put a lot of attention into that over the last year and made some really great strides. I think we start to democratize that and bring that to the masses.
The other area that I think is going to be really big this year is just going to be all the AI PC rage. Pat, we started talking about this, but AI PCs, AI devices, all the stuff we’re going to be able to do on our device with AI. 2023 was really about AI in the cloud, and we’ve heard little overtures about AI on the device, but the NPUs, these new abstractions of processing that can be done for AI dedicated workloads with LLMs on our phones, on our PCs, on our tablets, this stuff’s going to get hot. Pat, signal 65 is going to be all over that this year. We’re going to be testing this stuff. We’re going to be testing, we’re going to be telling which OEMs, which silicon is going to be delivering the best and brightest AI capabilities. So we’re going to be looking for the claims, looking for the progress, looking for the new formats and designs that are going to be launched to CES. And this is going to be not just something we’re going to talk about in January, but something we’re going to talk about all year.
Patrick Moorhead: Yeah, man, I got to tell you, man, I don’t even know what those certain set of benchmarks make sense or not.
Daniel Newman: We’re going to create them. And of course, next generation electrification, ADAS, smart cars, safe cars, that’ll be a thing. But that’s been a thing for three or four years, that’s not changing yet. It’s going to get better. It’s going to get bigger. It’s going to get more interesting. It’s going to be another huge show. It’s going to take a week to cover 1/10th of it, but we’ll be there. We’ll be paying attention. And of course, the most important thing that’s happening at this year’s CES is the inaugural launch of The Six Five Live, so look for that there, more to come on that. Pat, I think we did it. It’s time to roll. It’s time to go. Time to move on. Excellent. Episode 197, buddy. Let’s do this again next year.
Patrick Moorhead: Yeah, I think that’d be a great idea and I just really appreciate the audience. We haven’t been canceled yet, but then again, we really don’t say everything we’re thinking, but maybe we should. Let us know, audience, if you want to hear us lay it out there more in 2024, I would love to hear all ways that you would want to tune in more.
Daniel Newman: Yeah, let’s keep breaking it down, Pat. But hit that subscribe button just for all of our shows, be a part of our Six Five community. We appreciate each and every one of you. But for this week, for this episode, for this show, for Pat Moorhead, for Daniel Newman, myself, time to say goodbye.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
