iPad turns 10, Apple's first quarter earnings, and what Google is doing with the Search design

Episode Summary

Executive Summary: In this episode of The Vergecast, the hosts discuss Apple's earnings, the 10th anniversary of the iPad, Google's controversial search redesign, and the ongoing streaming wars. They debate Apple's services strategy, the iPad's struggle as a computing platform, Google's ad-centric design changes, and the bundling of streaming services with mobile carriers. The conversation also touches on privacy, business models, and the future of the open web.

Main Topics: Apple Earnings and Services Strategy (Priority: 5/5): Apple set iPhone sales records, but services revenue growth was slower than expected. The hosts analyze the profitability of Apple's various services, noting that App Store in-app purchases remain the primary revenue driver, while newer services like Apple TV+ and Arcade have high production costs and unproven business models. iPad at 10: A Missed Computing Opportunity (Priority: 5/5): The iPad turns 10, but its potential as a computer replacement remains unfulfilled due to a weak pro app ecosystem, confusing multitasking, and the lack of a return on investment for advanced users. The hosts note that the $330 iPad delivers 96% of the experience of the $1,300 iPad Pro. Google Search Redesign and Ad Controversy (Priority: 4/5): Google's redesign of search results made ads less visually distinct from organic results, sparking backlash. The hosts argue this was likely an intentional move to increase ad click-throughs, not an oversight, and highlights Google's shift from user experience to revenue optimization. Privacy, Tracking, and the Future of the Web (Priority: 4/5): The Scroll subscription service and its data tracking, Apple's intelligent tracking prevention, and Google's privacy budget are discussed as part of the ongoing arms race between privacy and advertising. The hosts debate whether centralized regulation or decentralized user control is the better path forward. Streaming Wars: Bundling and Carrier Deals (Priority: 4/5): AT&T's bet on HBO Max and 5G synergy, Comcast's net neutrality messaging, and the rise of streaming bundles with mobile carriers are analyzed. The hosts warn that preferential pricing of news outlets and data caps could distort competition and harm consumers. Format Wars: 4K HDR and HLG (Priority: 2/5): Fox Sports' use of the HLG HDR format for Super Bowl streaming creates compatibility issues with Apple TV and Roku. The hosts explain the technical reasons and lament the fragmentation of streaming quality.

Key Arguments: Apple's services revenue is heavily dependent on App Store in-app purchases, not new services like Apple TV+ or News+, which have high costs and limited adoption. The iPad fails as a computer replacement because the investment in learning its complex multitasking does not yield sufficient value for most users. Google's search redesign likely aimed to increase ad click-throughs by making ads resemble organic results, not to improve user trust. Privacy tools like intelligent tracking prevention can themselves become fingerprinting vectors, demonstrating the difficulty of solving tracking without arms races. Mobile carriers are bundling streaming services into phone plans, effectively creating new forms of data discrimination and zero-rating that could distort media consumption. Fox Sports' use of HLG HDR for the Super Bowl creates an unnecessary format battle, limiting access to a few devices.

Data Points: Apple services revenue growth: slower than expected - Despite Apple's focus on services, the category grew slower than anticipated this quarter, with in-app purchases being the main driver. iPad experience difference: 96% - The $330 iPad delivers 96% of the experience of the $1,300 iPad Pro according to Dieter Bohn. AT&T revenue hit: $1.2 billion - AT&T took a $1.2 billion revenue hit to secure content for HBO Max. Roku HDR uncertainty: not 100% sure - Fox Sports listed Roku as potentially supporting 4K HDR for the Super Bowl but later said they were not sure they could deliver HDR to Roku.

Pivotal Quotes: "I think Neil Young's idea about analog audio always being superior to digital audio is fundamentally wrong. Like, just on its face, wrong." — Nilay Patel: Reflecting on a recent interview with Neil Young about sound quality. "The thing that kills the iPad that actually makes it a tragedy is the value that you get for pushing through and learning all the weird ways that it works when you try and become an advanced user isn't high enough." — Dieter Bohn: Discussing why the iPad has not become a mainstream computer replacement. "We're going to just go ahead and advertise net neutrality." — Paul Miller: On Comcast's potential strategy to differentiate itself from mobile carriers by not zero-rating its own streaming service.

Implications: Apple's services pivot faces headwinds; iPads remain consumption devices. Google's search changes confirm ad revenue priority. Streaming bundled with mobile plans may create new data discrimination. Privacy tools need to avoid becoming tracking vectors themselves.