Episode Summary
Executive Summary: The episode centered on earnings-season whiplash across Microsoft, Meta, and Apple, with Tom Warren joining to dissect Surface’s 10-year arc, Windows-on-ARM’s stalled promise, Microsoft’s cloud-gaming uncertainty, and the company’s likely near-term retreat to safer Xbox hardware sales. The hosts contrasted that with Meta’s costly metaverse bet and Apple’s strong Mac performance, while also debating Apple’s tightening App Store power and the EU-forced shift to USB-C.
Main Topics: Microsoft Surface at 10 years: innovation, limits, and ARM frustration (Priority: 5/5): Tom Warren reviewed the Surface lineup’s decade-long impact, arguing that Surface rescued the Windows hardware market but now feels stuck in an incremental phase. The Surface Pro 9’s ARM option shows Microsoft still wants an ARM future, but performance, app support, and partner dynamics remain major blockers. Windows on ARM and Microsoft’s chip strategy (Priority: 5/5): The discussion repeatedly returned to Microsoft’s struggle to make ARM competitive on Windows. The hosts argued Microsoft may eventually need its own ARM chips to overcome Qualcomm’s performance limits and emulate Apple’s vertical integration. Microsoft earnings and cloud gaming slowdown (Priority: 4/5): Microsoft’s quarterly outlook was portrayed as cautious, with PC and Surface/device revenue expected to fall sharply. Cloud gaming and Game Pass remain strategic bets, but the company appears to be slowing some future-facing initiatives and leaning into proven Xbox hardware sales. Meta’s earnings collapse and the metaverse backlash (Priority: 5/5): Meta’s weak results, falling ad efficiency, and massive Reality Labs losses were framed as evidence that the market is losing patience with Zuckerberg’s metaverse obsession. The hosts highlighted how Apple’s privacy changes and TikTok competition are squeezing Meta’s core business. Apple’s Mac strength versus iPhone and services maturity (Priority: 4/5): Apple’s earnings showed Macs outperforming expectations, especially amid a weak PC market, while iPhone growth looked less compelling and upgrade cycles are lengthening. The MacBook Air was treated as Apple’s strongest mainstream product line right now. Apple App Store control, ads, and USB-C pressure (Priority: 5/5): The conversation covered Apple’s updated App Store rules, including charging fees for boost-style ads and NFT transactions, plus the EU’s push forcing USB-C. The hosts argued Apple is becoming more aggressive in monetizing its platform while resisting regulatory pressure.
Key Arguments: Surface’s importance was not about creating a single breakthrough device but about reviving the PC market and exporting design language to OEM partners. Microsoft’s ARM efforts have failed largely because Qualcomm chips are too weak and Windows app support is still incomplete. Apple’s move to USB-C is less about whether it should happen and more about Apple resenting being told when to do it. Meta’s metaverse spending is increasingly disconnected from the actual business that still makes money: Facebook, Instagram, and WhatsApp. Apple’s Mac line is succeeding because it offers a strong, simple consumer proposition at a time when PC buyers want reliability over novelty. Cloud gaming remains promising in theory, but infrastructure limits, platform restrictions, and uncertain economics make it vulnerable to being deprioritized. App Store advertising and NFT rules show Apple is willing to use its platform power more aggressively even as it criticizes others for surveillance and targeting. TikTok is emerging as a broader platform threat because it is becoming a place for search, entertainment, and potentially games.
Data Points: Surface anniversary: 10 years - The episode framed Surface as a decade-old product line and business strategy. Microsoft Windows OEM revenue change: -15% - Reported in Microsoft’s quarterly results alongside a declining PC market. Microsoft OEM revenue forecast next quarter: down in the high 30s - Management guidance for the next quarter was notably weaker than current results. Microsoft devices revenue forecast: -30% - Includes Surface, HoloLens, and PC accessories. Meta Reality Labs revenue: $285 million - Quarterly revenue for Meta’s metaverse/VR division. Meta Reality Labs operating loss: $3.7 billion - Quarterly loss attributed to the metaverse push. Meta Reality Labs year-to-date loss: $9.4 billion - Losses accumulated for the year so far. Meta ad impressions: +17% YoY - Meta showed more ads to users despite weaker monetization. Meta price per ad: -18% YoY - Ad pricing fell because tracking/attribution became less effective. Meta revenue change: -4% - Higher ad volume could not offset lower ad prices. Apple Mac revenue forecast vs actual: $9.3B forecast vs $11.5B actual - Apple beat expectations materially on Mac sales. Apple services forecast vs actual: $20.1B forecast vs $19.2B actual - Services missed slightly relative to expectations. LinkedIn ad reach claim: 1 billion professionals; 130 million decision makers - This was included in the ad read, not the editorial discussion. Zapier adoption claim: 3.4 million companies - Also from the sponsor read, not part of the discussion proper. Quest Pro price: $1,500 - Used to illustrate Meta’s high-priced bet on mixed reality and business use cases. Quest 3 timing: next holiday season - Meta confirmed a successor to Quest 2 is coming later, but not soon enough to change this year’s weakness. Euro USB-C mandate timing: 2024 - Discussed as the regulatory pressure point for Apple’s shift away from Lightning.
Pivotal Quotes: "the flagship podcast of crying on television" — Host intro: A joke that set up the episode’s theme of corporate earnings pain and public embarrassment. "if Microsoft is not deep down the road of making its own chips to solve some of this problem for itself, what in the hell are they doing?" — David Pierce: A central argument during the Surface and Windows-on-ARM discussion. "from what I can tell, I think this is going to be a very important thing" — Mark Zuckerberg (quoted by hosts): Referenced to underscore Meta’s continued conviction in the metaverse despite market skepticism.
Implications: The episode suggests the tech giants are splitting between mature cash engines and risky platform bets: Microsoft may retreat to safer Xbox/Windows hardware, Meta may face pressure to curb metaverse spending, and Apple will keep squeezing its platform until regulators or users force change.
About The Vergecast
The Vergecast is the flagship podcast from The Verge about small gadgets, Big Tech, and everything in between. Every Friday, hosts Nilay Patel and David Pierce hang out and make sense of the week’s most important technology news. And every Tuesday, David leads a selection of The Verge’s expert staffers in an exploration of how gadgets and software affect our lives – and which ones you should bring into yours.